401Busi

nessandGov
ernment

Tot
alMar
ks–20

Q.
1Whyi
stheunder
standi
ngofbusi
nessenv
ironmenti
mpor
tantf
orExpl
ainwi
tht
hehel
p

ofanyf
ourpoi
nts?

Q.
2Cr
it
ical
l
ycommentont
hecur
rentr
egul
ator
yfr
amewor
konNon-
Banki
ngFi
nanci
al

Compani
esi
nIndi
a.

Whyi
stheunder
standi
ngofbusi
nessenv
ironmenti
mpor
tantf
orExpl
ainwi
tht
hehel
p

ofanyf
ourpoi
nts?

Businessenv ir
onment :I
tisthesum t otalofalli
ndiv i
dual s,instit
utionsandot herforcest hatare
outsidethecont rolofbusinessent erpri
sebutmayaf fecti t
sper formance.I mpor tance:( i
)It
enablesthef i
rmt oidenti
fyopportuniti
esandget ti
ngt hef irstmov eradv antage: Analysi
sof
businessenv ir
onmenthel pstoidentifyopportuniti
esi .
e., positi
veext ernalchangest obe
exploit
edf i
rstinsteadoflosingthem t ocompet itors.(ii
)I thelpsthef i
rmst oidentifythreatsand
earl
ywar ningsi gnals:Astudyofbusi nessenv ir
onmenthel psanent erpri
set oident i
fythreatsi.
e
.,negativesignalsthathindersbusi nessperformanceandt akeappr opri
atepr eventive
measur esont ime.( ii
i
)Ithelpsi
nt appingusef ulresour ces: Abusi nessent erprisedependson
environmentasasour ceofinputli
ker awmat eri
als,labouret candasanout letforout l
eti.e.
,
goodsofser vi
ces, t
axes,etc.Analysishelpstogetr esour cest hatitneedst oconv erti
nto
outputswhi chanenv ir
onmentdesi res.(i
v)Ithelpsi ncopi ngwi t
hr apidchanges: I
thelps
managementt obecomemor esensitivetoeverchangi ngneedsoft hecust omer s.Asar esul
t,
theyareabl etorespondt osuchchangesef fect
ivel
y.(
v)I
thelpsinassi sti
nginplanningand
poli
cyf ormulati
on:Envi
ronment alscanningprovi
desthebasisfordecidingfutur
ecour seof
acti
on( planni
ng)andgui del
inesfordecisionmaking(pol
i
cy).(v
i)Ithelpsinimprov i
ng
performance: Theconti
nuousmoni tor
ingofenvir
onmentandadopt ingsui t
abl
ebusi ness
practi
cesnotonl yimprovetheirpresentperfor
mancebutalsocont i
nuet osucceedi nthe
mar ketforalongerperi
od.

Whyist
heunder
standingofbusi
nessenv
ironmenti
mpor
tantf
ormanager
s?Expl
ainwi
tht
he
hel
pofanyf
ourpoint
s.

Under
standi
ngofbusi
nessenv
ironmenti
simpor
tantf
ormanager
sbecause,

(
i)I
thelpsthefi
rmt oidentifyopportunit
iesandgett hefi
rstmoveradvantage:Theabili
tyt
o
i
denti
fyi
ngtheexternaloppor t
unit
iesear l
yandt omaket hefir
stmov e,
makesanor gani
sati
on
t
hemar ketl
eader.Environmentpr ovidesnumer ousopportuni
ti
esforbusinesssuccess.Earl
y
i
denti
fi
cati
onofoppor tunit
ieshelpsanent er
prisetobet hefir
sttoexpl
oitthem i
nsteadoflosi
ng
t
hem tocompetit
orsandbecomet hemar ketfollower.

(i
i)I
thel
psthefi
rmt oident
ifyt
hreat sandearlywar
ningsi
gnal
s:Busi
nessenvi
ronmentisprone
tonumerousthr
eats.Envi
ronment alawarenesscanhelpmanager
stoident
if
yvari
ousthreats
ontimeandserveasanear l
ywar ningsignal
.

(i
ii
)Ithelpsintappi
ngusef ulresour
ces:Envir
onmentisthesourceofal l
resour
cesabusi ness
needsf ori
tsoperati
on.Ittakesnaturalr
esources,humanresourceandf i
nanci
alr
esourceand
convertthem togoodsandser vi
cestocustomer s,
makepay mentoftaxestogovernment ,
ret
urnonf inanci
ali
nv est
mentt oinvest
orsandsoon.Asanor ganisat
ioniscompl
etely
dependentont heresourcesfrom envir
onment ,amanagershouldhaveagoodunder standing
aboutbusinessenv i
ronment .

(i
v)Ithelpsi
nassisti
nginpl
anningandpol
icyf
ormulati
on:Busi
nessenvironmenti
sv ery
dynami candisasourceofbot
hopportuni
ti
esandthreat
s.Onlywithaclearunder
standingof
thevariousaspect
softheenvi
ronment,amanagercanmakepl ansforf
ut ur
eandformul at
e
poli
cies.

Q.
2Cr
it
ical
l
ycommentont
hecur
rentr
egul
ator
yfr
amewor
konNon-
Banki
ngFi
nanci
al

Compani
esi
nIndi
a.
RevisedRegulat
oryFramewor kin2014-Theregul
ator
yframeworkforthesectorwasrevi
ewed
i
n2014i nv
iewofther apidst
ri
desmadebyNBFCsi ntermsofthei
rsize,nat
ureofoperat
ions
withentryi
ntonewerar easoffi
nanci
alserv
icesandproduct
s.Thekeychangesi nt
her ev
ised
regulat
oryfr
amewor kwer easfoll
ows:

Requi
rementofmi
nimum NOFof₹2cr
oref
orl
egacyNBFCs.

Har
moni
sat
ionofdeposi
taccept
ancer
equi
rement
sacr
ossNBFCcat
egor
ies.

Revi
sionofthet
hreshol
dofsyst
emicimport
ancefrom ₹100cr
oret
o₹500cr oreandincl
usi
on
ofmulti
pleNBFCswithi
nthesamegroupforr
eckoningsyst
emicsi
gni
fi
cancethreshol
d.

Diff
erenti
atedregulat
oryapproachbasedoncustomerinter
faceandsourceoffunds.Atone
endoft hespectrum,enti
ti
eswi t
hassetsizel
essthan₹500croreandnotaccessingpubl
ic
fundswi t
hnocust omerinter
facewereexemptedfrom pr
udenti
alandbusinessconduct
regulat
ions.Attheotherend,enti
ti
esaccessi
ngpubli
cfundswithcust
omeri nt
erf
acewer e
subject
edt oful
l sl
ewofregulati
ons.

Har
moni
sati
onofassetclassi
fi
cati
onnormsforDepositt
aki
ngNon-BankingFi
nanci
alCompany
(
NBFC-
D)andSyst
emi cal
l
yI mport
antNon-Deposi
ttaki
ngNon-Banki
ngFinanci
alCompany
(
NBFC-
ND-SI
)wit
hbanks.

Revi
ewofcorporategover
nanceanddi sclosur
enor msl eadi
ngtoconst
it
uti
onofBoar
d
Commi t
tees(
AuditCommi t
tee,NominationCommi t
tee,andRiskManagementCommitt
ee)and
rot
ati
onofauditpart
ner
sev er
ythreeyearsapplicabl
ef orNBFC-DandNBFC-ND-SI
.

TheNBFC(
Non-
Banki
ngFi
nanceCompany
)sect
orhasev
olv
edconsi
der
abl
yin

t
ermsofi
tssi
ze,
oper
ati
ons,
technol
ogi
cal
sophi
sti
cat
ion,
andent
ryi
ntonewer
ar
easoff
inanci
alser
vicesandpr
oduct
s.NBFCsar
enowdeepl
yint
erconnect
ed

wi
tht
heent
it
iesi
nthef
inanci
alsect
or,
onbot
hsi
desoft
hei
rbal
ancesheet
s.

Bei
ngf
inanci
alent
it
ies,
theyar
easex
posedt
ori
sksar
isi
ngoutofcount
erpar
ty

f
ail
ures,
fundi
ngandassetconcent
rat
ion,
int
erestr
atemov
ementandr
isks

per
tai
ningt
oli
qui
dit
yandsol
vency
,asanyot
herf
inanci
alsect
orpl
ayer
.Att
he

samet
imet
her
ear
esegment
swi
thi
nthesect
ort
hatdonotposeanysi
gni
fi
cant

r
iskst
othesy
stem.Ther
eist
her
efor
e,af
eltneedt
oaddr
esst
her
isks,
wit
hout

i
mpedi
ngt
hedy
nami
sm di
spl
ayedbyNBFCsi
ndel
i
ver
ingi
nnov
ati
onandl
astmi
l
e

connect
ivi
tyf
ormeet
ingt
hecr
edi
tneedsoft
hepr
oduct
ivesect
orsoft
he

economy
.

2.Wi
tht
heabov
ebackgr
ound,
arev
iewoft
heent
ir
eregul
ator
yfr
amewor
kfor

t
heNBFCsect
orhasbeenunder
takenwi
thav
iewt
otr
ansi
ti
oni
ng,
overt
ime,
to

anact
ivi
tybasedr
egul
ati
onofNBFCs.Asaf
ir
stst
epi
nthi
sdi
rect
ion,
cer
tai
n
changest
other
egul
ator
yfr
amewor
kar
esoughtt
obemadet
oa)addr
essr
isks

wher
evert
heyexi
st,
b)addr
essr
egul
ator
ygapsandar
bit
ragear
isi
ngf
rom

di
ff
erent
ial
regul
ati
ons,
bot
hwi
thi
nthesect
oraswel
lasv
is-
a-v
isot
herf
inanci
al

i
nst
it
uti
ons,
c)har
moni
seandsi
mpl
i
fyr
egul
ati
onst
ofaci
l
itat
easmoot
her

compl
i
ancecul
tur
eamongNBFCs,
andd)st
rengt
hengov
ernancest
andar
ds.

3.I
ndoi
ngso,
cer
tai
nimpor
tantr
ecommendat
ionsmadebyt
heWor
king

Gr
ouponI
ssuesandConcer
nsi
ntheNBFCSect
or(
Chai
rper
son:
Smt
.Usha

Thor
at)andt
heCommi
tt
eeonCompr
ehensi
veFi
nanci
alSer
vicesf
orSmal
l

Busi
nessesandLowI
ncomeHousehol
ds(
Chai
rman:
Dr.Nachi
ketMor
),hav
e

beendr
awnupon.Thechangesnowi
ntr
oducedt
other
egul
ator
yfr
amewor
kar
e

del
i
neat
edbel
ow.

3.I
ndoi
ngso,
cer
tai
nimpor
tantr
ecommendat
ionsmadebyt
heWor
king
Gr
ouponI
ssuesandConcer
nsi
ntheNBFCSect
or(
Chai
rper
son:
Smt
.Usha

Thor
at)andt
heCommi
tt
eeonCompr
ehensi
veFi
nanci
alSer
vicesf
orSmal
l

Busi
nessesandLowI
ncomeHousehol
ds(
Chai
rman:
Dr.Nachi
ketMor
),hav
e

beendr
awnupon.Thechangesnowi
ntr
oducedt
other
egul
ator
yfr
amewor
kar
e

del
i
neat
edbel
ow.

4.Requi
rementofMi
nimum NOFofRs.200l
akh

4.
1NBFCsar
erequi
redt
oobt
ainaCer
ti
fi
cat
eofRegi
str
ati
on(
CoR)f
rom t
he

Bankt
ocommence/
car
ryonbusi
nessofNBFIi
nter
msofSect
ion45-
IAoft
heRBI

Act
,1934.Thesai
dsect
ional
sopr
escr
ibest
hemi
nimum NetOwnedFund(
NOF)

r
equi
rement
.Int
ermsofNot
if
icat
ionNo.
DNBS.
132/
CGM(
VSNM)
-99dat
edApr
il

21,
1999,
themi
nimum NOFr
equi
rementf
ornewcompani
esappl
yi
ngf
orgr
antof

CoRt
ocommencebusi
nessofanNBFCi
sst
ipul
atedatRs.200l
akh.Al
though

t
her
equi
rementofmi
nimum NOFatpr
esentst
andsatRs.200l
akh,
themi
nimum
NOFf
orcompani
est
hatwer
eal
readyi
nexi
stencebef
oreApr
il21,
1999was

r
etai
nedatRs.25l
akh.Gi
vent
heneedf
orst
rengt
heni
ngt
hef
inanci
alsect
orand

t
echnol
ogyadopt
ion,
andi
nvi
ewoft
hei
ncr
easi
ngcompl
exi
ti
esofser
vicesof
fer
ed

byNBFCs,
itshal
lbemandat
oryf
oral
lNBFCst
oat
tai
nami
nimum NOFofRs.

200l
akhbyt
heendofMar
ch2017,
aspert
hemi
l
est
onesgi
venbel
ow:

•Rs.100l
akhbyt
heendofMar
ch2016

•Rs.200l
akhbyt
heendofMar
ch2017

4.
2Itwi
l
lbei
ncumbentuponsuchNBFCs,
theNOFofwhi
chcur
rent
lyf
all
s

bel
owRs.200l
akh,
tosubmi
tast
atut
oryaudi
tor
'scer
ti
fi
cat
ecer
ti
fyi
ngcompl
i
ance

t
other
evi
sedl
evel
satt
heendofeachoft
het
wof
inanci
aly
ear
sasgi
venabov
e.

4.
3NBFCsf
ail
i
ngt
oachi
evet
hepr
escr
ibedcei
l
ingwi
thi
nthest
ipul
atedt
ime

per
iodshal
lnotbeel
i
gibl
etohol
dtheCoRasNBFCs.TheBankwi
l
lini
ti
atet
he
pr
ocessf
orcancel
l
ati
onofCoRagai
nstsuchNBFCs.

5.Deposi
tAccept
ance

5.
1Asperext
antNBFCsAccept
anceofPubl
i
cDeposi
t(Reser
veBank)

Di
rect
ions,
1998,
anunr
atedAssetFi
nanceCompany(
AFC)hav
ingNOFofRs.

25l
akhormor
e,compl
yi
ngwi
thal
lthepr
udent
ial
nor
msandmai
ntai
ningcapi
tal

adequacyr
ati
oofnotl
esst
hanf
if
teenpercent
,isal
l
owedt
oacceptorr
enew

publ
i
cdeposi
tsnotexceedi
ngoneandhal
fti
mesofi
tsNOForupt
oRs.10cr
ore,

whi
chev
eri
slower
.AFCswhi
char
erat
edandcompl
yi
ngwi
thal
lthepr
udent
ial

r
egul
ati
onsar
eal
l
owedt
oacceptdeposi
tsupt
o4t
imesoft
hei
rNOF.

5.
2Inor
dert
ohar
moni
set
hedeposi
taccept
ancer
egul
ati
onsacr
ossal
ldeposi
t

t
aki
ngNBFCs(
NBFCs-
D)andmov
eov
ert
oar
egi
menofonl
ycr
edi
trat
ed

NBFCs-
Daccessi
ngpubl
i
cdeposi
ts,
exi
sti
ngunr
atedAFCsshal
lhav
etoget

t
hemsel
vesr
atedbyMar
ch31,
2016.ThoseAFCst
hatdonotgetani
nvest
ment
gr
ader
ati
ngbyMar
ch31,
2016,
wil
lnotbeal
l
owedt
orenewexi
sti
ngoraccept

f
reshdeposi
tst
her
eaf
ter
.Int
hei
nter
veni
ngper
iod,
i.
e.t
il
lMar
ch31,
2016,
unr
ated

AFCsort
hosewi
thasub-
inv
est
mentgr
ader
ati
ngcanonl
yrenewexi
sti
ng

deposi
tsonmat
uri
ty,
andnotacceptf
reshdeposi
ts,
til
ltheyobt
ainani
nvest
ment

gr
ader
ati
ng.

5.
3Ithasbeendeci
dedt
ohar
moni
set
hel
i
mitf
oraccept
anceofdeposi
ts

acr
osst
hesect
orbyr
educi
ngt
hesamef
orr
atedAFCsf
rom 4t
imest
o1.
5ti
mes

ofNOF,
wit
hef
fectf
rom t
hedat
eoft
hisci
rcul
ar.Whi
l
eAFCshol
dingdeposi
tsi
n

excessoft
her
evi
sedl
i
mitshoul
dnotaccessf
reshdeposi
tsorr
enewexi
sti
ng

onest
il
ltheyconf
ormt
othenewl
i
mit
,theexi
sti
ngdeposi
tswi
l
lbeal
l
owedt
orun

of
fti
l
lmat
uri
ty.I
tmustbement
ionedher
ethatt
hedat
aav
ail
abl
ewi
tht
he

Reser
veBanki
ndi
cat
est
hatmostAFCsar
eal
readycompl
yi
ngwi
tht
her
evi
sed
nor
msandv
eryf
ewNBFCshav
edeposi
tsi
nexcessof1.
5ti
mesoft
heNOF.

Al
so,
incaseswher
ethi
sli
miti
sexceeded,
theexcessi
snotsubst
ant
ial
.Iti
s

t
her
efor
eexpect
ed,
thatt
hishar
moni
zat
ionmeasur
ewi
l
lnotbedi
srupt
ive.

402I
nnov
ati
onManagement

Tot
alMar
ks–20

Q.
1.Whatdoy
oumeanbyI
nnov
ati
on?Expl
ainchar
act
eri
sti
csofI
nnov
ati
on?

Q.
2.Wr
it
eindet
ail
aboutI
nvent
ioncr
eat
ivi
tyandI
nnov
ati
on.

Q.
1.Whatdoy
oumeanbyI
nnov
ati
on?Expl
ainchar
act
eri
sti
csofI
nnov
ati
on?

I
nnovationi
sthepr
acti
cali
mplementat
ionofi
deasthatresul
tint
hei
ntr
oduct
ionofnewgoods
orser
vicesori
mprovementi
noffer
inggoodsorser
vices.

I
nnov
ationisr
elatedto,butnotthesameas, i
nvent
ion:
[4]i
nnovat
ionismoreapttoi
nvol
vethe
pr
act
icali
mplement at
ionofaninventi
on(i
.e.new/impr ov
edabil
ity
)tomakeameaningful
i
mpactinamar ketorsociet
y,[
5]andnotal
l i
nnovat
ionsrequi
reanewi nv
enti
on.

Def
ini
ti
on-

BasedonBar
aghehetalsur
vey
.

"I
nnovat
ionist
hemul t
i-st
ageprocesswher ebyorgani
zati
onstransf
ormideasint
o
new/i
mpr ov
edproducts,ser
viceorprocesses,i
nordertoadvance,competeanddif
fer
ent
iat
e
themsel
vessuccessf
ullyint
heirmarketpl
ace"

Ev
eret
tRoger
s,def
inesi
tas:
"
Ani
dea,
pract
ice,
orobj
ectt
hati
sper
cei
vedasnewbyani
ndi
vi
dual
orot
heruni
tofadopt
ion"
[

Char
act
eri
sti
cs-

Rel
ati
veadv
ant
ages

Potenti
alaudi
enceneedst
oseehowy ourinnovat
ioni
mprovesfr
om pr
evi
ousgener
ati
on
product
saccordingt
othei
rcur
rentsi
tuat
ion.I
mprovementscanbemadeinoneormanyof
theseareas:

al
l
ianceofmul
ti
plef
unct
ionsi
ntoonet
ool
,

bet
terser
vice,

decr
easedneedf
orequi
pmentandsuppl
i
es,

i
mpr
ovedi
nter
face,

i
ncr
easedcust
omi
zabi
l
ity
,longev
ity
,

empower
mentofuser
s,

r
educeduseref
for
t,env
ironment
ali
mpact
,

i
ncr
easedpr
oduct
ivi
ty,

Sav
ingoft
ime,
money
,spaceandst
orage.

Thesimpl
eexampleofinnovati
oni
stypewr
iter
sarerepl
acedbycomputerword-
processi
ng
progr
ams.Ther
elat
iveadvantagewasobvi
ous;thi
swordprogr
amsdidn’tr
equir
eanyextra
physicalot
herthenapersonalcomputer;r
educedtheneedfori
nk;documentscoul dbeedited
easil
yandf i
lescouldbesavedandtransport
edtoothercomputer
susingPDs, disks.Soon,
typewrit
erswereclear
edoutofoffi
cesreplaci
ngthesecomputerword-
processingpr ogr
ams.

Compat
ibi
l
ity

Compat i
bili
tyref
erst othehar
monyofr elat
ionshipthataninnovati
onhaswi thpotent
ial
i
ndivi
dual sastheyabsor bmentall
yiti
ntotheirl
ives.Topotenti
alusersitisi
mpor t
anttoknow
thatt
hei nnovati
ony ouareprovi
dingwill
beagr eeablewiththei
rli
festy
le.Ify
ourinnovat
ion
requi
resahugel ifestyl
echange;orauserhav etoacquireaddit
ionalproduct
stousey our
i
nnovationthenitismor eapttofail
.

Innovat
ionsareagreat
estsuccesswheni ndi
vidualsareabl
etosmoot
hlyadoptt
hem;
they
couldeasil
yrepl
aceanexist
ingproductoridea,forthebet
terwi
thy
ouri
nnovati
on.

Apple’
siPadi
saper f
ectexampl
eofaninnovation;i
thadahi ghlev
elofcompati
bil
i
tywit
huser
s’
l
iveswhenrel
eased.Manyuserswerecapabl
et orepl
acet hei
rcurr
entl
yusi
ngproduct
switht
he
i
Pad, t
ocheckemail,
toreadmagazi
nes,booksandbl ogs,tovi
ewv i
deosonl
ineandmanymore
acti
vit
ieswhi
chtheycur
rentl
yweredoi
ngont heirsmartphonesandlapt
ops.

Designersmustunderst
andinfr
astr
uctur
eandwhatimprovementwi l
lworkontheproductt
hey
aredesigni
ng,andshouldhavedeepunderst
andi
ngofcondit
ionsthatyourpr
oductwil
lmet.A
desi
gnermustanswerf oll
owingquest
ionwhil
ethi
nki
ngofhisinnovati
oncompatibi
l
ity:

Howwi
l
lyouri
nnov
ati
onf
iti
ntol
i
vesofi
tsuser
s?

I
sther
eanyaddi
ti
onal
product
swi
l
lber
equi
redbyy
ouri
nnov
ati
ont
osucceed?

Howwi
l
lyouri
nnov
ati
onbr
ingshi
fti
nthebehav
iourofi
tsadopt
er?

Whatar
eexi
sti
ngpr
oduct
sthaty
ouri
nnov
ati
onmayr
epl
ace?
Howdoesyouri
nnovat
ionaf
fecty
ourpot
ent
ial
adopt
ers’
ment
all
y,t
hei
rbel
i
efsandat
ti
tudes
r
egar
dingy
ourinnov
ati
onrel
ease?

Thequesti
onsaremeantt ohi
ghl
ightadesi
gnersneedtobeawareofnotarecomprehended.
Thesuccessofyourinnov
ati
onli
eony ourdesi
gnteam whi
chensur
ethattheinnov
ati
onadjust
wit
htheusers’
beli
efs,val
ues,
att
itudeandbehavi
ours.

Compl
exi
tyv
ssi
mpl
i
cit
y

Howdi
ff
icul
tforanadopt
ert
olear
nandusey
ouri
nnov
ati
on?

Obv i
ously,
compl exit
yslowsdowny ourprogress;
thecomplexinnov at
ioni
smorediff
icultfor
potenti
alusers’t
oi ncor
porat
eiti
ntotheirli
ves.Adopter
sdonotinv estmuchti
meinlearningto
useani nnovati
on.Themor einst
inct
iveyourinnovat
ionwouldbe,themor esur
elyi
twillbe
adopted.

Yourdesignteam shoulddesi
gnwi t
hkeepingi
nmindmainfocusSimpli
cit
y.Yourt
eam mustbe
abl
etoaddr essusabil
it
yissuethatuser
sface,
andthencl
ari
fythem t
hroughFAQs,wal
kthr
ough
vi
deos,tool
tips,
otherl
earni
ngmat er
ial
s.

Tr
ial
abi
l
ity

Howeasilyyourpot enti
aladopterscanexplor
eyourinnovat
iveideadescri
best r
ial
abil
it
y.Bef
ore
committ
ingtoy ourinnovati
on, userswanttogi
veabr i
efl
ookonwhaty ourinnovati
oncando
andwanttogi veitatestrun.Thisiswhatthefundamentalconceptoftri
alsizesforconcr
ete
goodsandbet areleasesfordigital
goods.Ever
yadopterwantst oseeforthemselveswhatand
howli
femi ghtbet heyadoptthepr oduct
.

Ever
ydesignersneedt omakepr oductavai
labl
etopotenti
aladoptersf
ortrial
s.Ther
ear e
exampl
esf oraccompl i
shmentoft r
ail
abi
l
ityofdigi
tal
product;of
fersof30-dayfreet
rial
with
l
imit
edfunctional
ity
,hopingthatusersmighthaveagoodexper i
enceduringthisper
iod,and
payi
ngforthef ul
lsubscri
pti
onpriceisworthbei
ng.
Mostimport
antl
yy ourdesignt
eam mustensur ethattri
alproductprov
idedshouldbeofhigh
qual
it
yandrepresentstheexperi
encethatyouruserswant stohave.Don’toverdoyourf
reet
rial
phenomenon;t
hisisnoty ourf
ir
stopportuni
tyfortest
ingorgat her
inguserfeedback.

Obser
vabi
l
ity

Obser
vabil
i
tyisthebenefit
sorresul
tsofusinganinnovat
ionvisibl
etopotent
ialadopter
s.
Obser
vabil
i
tystretchesbeyondhavi
ngearl
ieruser
suseani nnov at
ioni
nv i
ewoflaterusers;
pot
enti
aladoptersmustclearl
yfi
gureoutt
hebenef i
tsofadoptinganinnovat
ionandusingit.

Ther
ear
esomeway
sthr
oughwhi
chy
oucanshowbenef
it
stopot
ent
ial
adopt
ers:

Side-
by-si
decomparison.Aside-
by-
sidecompari
sonwit
hcur
rentl
yusi
ngpr
oducti
sgoodwhen
yourinnovat
ionhassimpleandeasi
lynoti
ceabl
eimpr
ovements.

Befor
eandafterShowi
ngadopter
stheposi
tiv
ediffer
enceint
hei
rli
vesy
ouri
nnov
ati
onwi
l
lbr
ing,
wil
lhaveahugeimpactonthesuccessofy
ourinnovati
on.

Testi
monial
sRunni
nganadcampaign,
isimpor
tant,peopl
eli
ket
ohearwhotheypercei
vetobe
l
ikethem.User
swhowrit
erev
iewsandtesti
monial
smakeabi gi
mpactoni
nfluenci
ngthe
potent
ial
adopt
ers.

Q.
2.Wr
it
eindet
ail
aboutI
nvent
ioncr
eat
ivi
tyandI
nnov
ati
on.

def
ini
ti
onofi
nnov
ati
on,
inv
ent
ionandcr
eat
ivi
ty:

I
nnov
ati
oni
sthepr
ocessoft
urni
nganewconcepti
ntocommer
cial
successorwi
despr
eaduse.

I
nvent
ioni
sthecr
eat
ionofanewi
deaorconcept
.

Cr
eat
ivi
tyi
stheactoft
urni
ngnewandi
magi
nat
ivei
deasi
ntor
eal
i
ty.
Oneoft hekeyrequir
ement sf orentrepreneur
ial successi syourabil
it
ytodev el
opandof f
er
somet hinguniquetot hemar ketplace.Overti
me, entrepr eneurshi
phasbecomeassoci atedwit
h
creati
v i
ty,t
heabili
tytodev elopsomet hingorigi
nal ,particular
lyanideaorar epr
esentationofan
i
dea.I nnovati
onrequirescr eat i
vi
ty,butinnovati
oni smor especifi
cal
lytheappli
cat
ionof
creati
v i
ty.I
nnovati
onist hemani festati
onofcr eativit
yi ntoausabl eproductorser
vice.Inthe
entrepreneuri
alcontext,i
nnov ati
oni sanynewi dea, process, orproduct,orachanget oan
existi
ngpr oductorprocesst hataddsv aluetot hatexi stingproductorservi
ce.

Howi sani nv enti

ondif
ferentfrom aninnovati
on?Al li
nventi
onscontaini
nnov ati
ons,butnot
everyinnov ati
onr i
sestothelev el
ofauni queinventi
on.Forourpurposes,aninventi
onisatrul
y
novelpr oduct,servi
ce,
orpr ocess.Itwil
lbebasedonpr evi
ousideasandpr oducts,
butiti
ssuch
aleapt hatitisnotconsideredanaddi ti
ont oorav ar
iantofanexist
ingproductbutsomet hi
ng
unique.Tabl e4.2highl
ightsthediffer
encesbet weenthesethreeconcepts.

Cr
eat
ivi
ty,
Innov
ati
on,
andI
nvent
ion

Concept Descr
ipt
ion

Cr
eati
vi
ty abi
l
ityt
odev el
opsomethi
ngor
igi
nal
,par
ti
cul
arl
yani
deaorar
epr
esent
ati
onofan
i
dea,
withanel
ementofaesthet
icf
lai
r

I
nnov
ati
on changet
hataddsv
aluet
oanexi
sti
ngpr
oductorser
vice

I
nvent
ion tr
ulynovelpr
oduct
,ser
vice,
orprocessthat
,thoughbasedonideasandpr
oduct
s
t
hathavecomebefor
e,repr
esent
saleap,acr
eationtr
ulynovelanddi
ffer
ent

Creat
ivi
ty,i
nventi
on,
andinnovati
onareall
interr
elatedandnecessar
yforgrowthtooccur.We
canfoll
owanysuccessfulcompanyandseeani nvestmentoft
imeandef f
orti
ntothesethr
ee
concepts.Basedonourexper
ienceandresearchconducted,wehavediscover
edtheseinsi
ght
s:

Cr
eat
ivi
ty,
inv
ent
ionandi
nnov
ati
on2019

Cl
i
ckt
odownl
oad

Cr
eat
ivi
ty
Creat
ivi
tyi
stheactofchannel
ingi
maginat
ioni
ntosomethingconcr
ete.Itisthever
yfi
rstst
age
ofdesi
gn,wherei
deasstartt
oactual
l
ytakefor
m, andaplancanbedev eloped.

Exampl
esofcr
eat
ivi
ty:

i
nthecaseofUber
,cr
eativ
itywasnecessar
yinproduci
ngt
heconceptofr
ideshar
ingandof
maki
ngdri
vingj
obsaccessibl
etoanyindi
vi
dual
.

anotherexampl
ecanbet heGoogleGlass,
whichalt
houghwereverycreat
iveatt
hetime(
new,
di
fferenti
nthemarket
),werenotnecessar
il
yinnov
ati
ve(monetar
yreturnoveri
nvest
mentmade
bythecompany).

I
nvent
ion

Invent
ioni sthephysi
calcr
eat i
onofanewconceptori dea.Al
so,fr
om Nesta’
sinnovationpol
icy
tookit
,itisdefi
nedasThecr eationofanideatodoormakesomet hingwit
houtv er
if
icati
onthat
i
twor ks, ori
scommer ci
all
yv al
uable.I
nventi
oncannotoccurwit
houtcreat
ivi
ty,
butjust
creati
vityisnotenoughtoproper l
ydevel
opanidea.

Exampl
esofi
nvent
ion:

pr
oductdesi
gns,
busi
nessmodel
s,orwor
kingpr
otot
ypes.

Uberchannel
edi
nventi
onincreat
ingasol
i
dandwor
kingbusi
nessmodel
,basedupont
hei
deas
theyhadfor
medinthecreat
ionstage.

I
nnov
ati
on

Innovat
ionti
esev ery
t hi
ngt oget
herinbusiness.Accordingt
oBrit
ishStandards,I
nnovati
onisthe
successful
exploit
ationofnewi deas.I
tinvol
vesturni
nganinventi
onintoacommer ci
alsuccess
andencouragingitswi despreaduse.Thisisthestagewhereboldideas,onceproperl
y
devel
oped,arebroughtt othepubl i
ceye.ThisiswhatUberhasachi eved,nowthati
tsproductis
i
nuseal loverthewor ldandbenef i
tspeopleeverywhere.

Exampl
esofi
nnov
ati
on:
successful
product
sandser
vicesl
i
keCar
eof
,AmazonScout
,Impossi
bleFood,
Googl
e’
ssel
f-
dri
vingtaxi
s,…

successful
processi
nnov
ati
onsl
i
keAmazonpr
edi
cti
veor
der
s,oraddi
ti
vemanuf
act
uri
ng
processes.

Onceagai
n,I
nnovat
ioncannothappenwithoutcr
eat
ivi
tyori
nvent
ion,
andnei
thercr
eat
ivi
tynor
i
nvent
ioni
susefuli
nbusinessi
fnotproperl
yexecut
ed.

Ascanbeclearl
yseeni
ntheexampl
eofUber
,al
lthet
hreest
epsar
ecr
uci
ali
nor
dert
ocr
eat
ea
pr
ofi
tabl
ebusiness.

Uberachievedinnovat
ionthr
oughcreati
veideas,
apr
of i
tabl
ebusi
nessplan,andwi despr
ead
marketi
ng,allofwhichall
owedtheproducttocompl
etel
ychangethecarsharingindustr
y.
Thesethreestagesarestepsthatwi
llal
lowyoutocr
eateandcommer ci
alizeyourproduct,
and
makey ourbusinessgrowandsucceed.

403I
ndi
anCommer
cial
Laws

Tot
alMar
ks–20(
AnyTwo)

1.Def
inet
het
erm“
consumer
”and“
consumerdi
sput
e”wi
tht
hecompl
aintr
elat
ingt
o‘unf
air

t
radepr
act
ice’
undert
heConsumerPr
otect
ionAct
,1986.

2.
”Thel
egal
per
sonal
i
tyofacompanyi
sdi
sti
nctanddi
ff
erentf
rom i
tsmemberi
ndi
vi
dual
l
y

andcol
l
ect
ivel
y”commentwi
tht
hedeci
siongi
veni
nSol
omonv
.Sol
omon&Co.Lt
d.

3.Expl
aint
hedoct
ri
neofI
ndoorManagementandexcept
iont
other
ule.
1.Def
inet
het
erm“
consumer
”and“
consumerdi
sput
e”wi
tht
hecompl
aintr
elat
ingt
o‘unf
air

t
radepr
act
ice’
undert
heConsumerPr
otect
ionAct
,1986.

Consumer
:

Thi
sdef i
nit
ionconsi
stsoft
wopar
ts-onef
ort
hepur
chaseofgoodsandt
heot
herf
orav
ail
i
ng
ser
vices.

GOODS

SERVI
CES

Consumermeansanyper
sonwho-

buy
sanygoodsf
oraconsi
der
ati
onwhi
ch-

hasbeenpai
d;or

pr
omi
sedt
opay
;or

par
tl
ypai
dandpar
tl
ypr
omi
sed;
or

underanysy
stem ofdef
err
edpay
ment
;and
i
ncl
udesanyuserofsuchgoodsotherthanthepersonwhobuyssuchgoodsforconsi
der
ati
on
pai
dorpromisedorpar
tl
ypaidorpartl
ypromised,
orunderanysyst
em ofdef
err
edpayment,
whensuchuseismadewiththeapprovalofsuchperson;
but

doesnoti
ncl
udeaper
sonwhoobt
ainssuchgoodsf
orr
esal
eorf
oranycommer
cial
pur
pose.

Consumermeansanyper
sonwho-

hi
resorav
ail
sofanyser
vicesf
oraconsi
der
ati
onwhi
ch-

hasbeenpai
d;or

pr
omi
sedt
opay
;or

par
tl
ypai
dandpar
tl
ypr
omi
sed;
or

underanysy
stem ofdef
err
edpay
ment
;and

i
ncludesanybenefi
ciar
yofsuchservi
cesotherthanthepersonwhohiresoravai
lsoft
he
ser
v i
cesforconsi
der
ationpai
dorpromised,orpart
lypai
dorpr omi
sed,orunderanysy
stem of
def
erredpayment,whensuchserv
icesareavail
edofwi t
htheapproval
ofthefir
stmenti
oned
per
son;but

doesnoti
ncl
udeaper
sonwhoav
ail
sofsuchser
vicesf
oranycommer
cial
pur
pose.

Explanati
ontothi
ssecti
ondefi
nesthet
erms‘commerci
alpurpose’
whichdoesnotincl
udeuse
byaper sonofgoodsboughtandusedbyhi
m andservi
cesavail
edbyhim excl
usi
vel
yfort
he
purposesofearni
nghisli
vel
i
hoodbymeansofselfemployment.
ConsumerDi
sput
e:

Beforefil
i
ngacompl aintbeforetheConsumerf orum ther
eshouldbeaconsumerdi spute.
Consumerdi sputemeansadi sput
ewher ethepersonagainstwhom acompl ainthasbeen
made, deniesordisputestheal l
egati
onscontainedinthecomplai
nt.Accordingtothi sdefi
niti
on
theconsumerwhi l
ediscov eri
ngadef ecti
nthegoodsheshoul dfir
stmakeacompl aintin
writ
ingtothesellerforrectif
yingthedefect
.Ift
hesel l
erdoesnotrect
if
yorr efusetor ecti
fythe
defect,adisput
et henarises,whichisthebasef orf
il
ingcomplai
ntbeforeconsumerf orum.

Compl
aint
:

Beforet heenactmentofCompet i
ti
onAct ,2002theConsumeri shav ingopti
ontofil
ea
compl aintbefor
etheConsumerFor um fordefectsi
ngoodsordef iciencyinser
viceandalsot
o
fi
leacompl ai
ntbeforetheMRTPCommi ssi
onforunfairt
radepracti
ceandr estr
icti
vetr
ade
pract
icei nrespecttotheconsumer.AfterenactmentofCompet i
ti
onAct ,2002theMRTPAct
wasr epealedandt heConsumerFor um isgiv
enmor epowert oenquir et
heUnfairTrade
pract
icesandRest r
ict
iveTradePr
act i
ces.Sec.2©definestheterm compl ai
ntwhichmeansany
al
legationinwr i
ti
ngmadebyacompl ai
nantthat-

anunfai
rtr
adepr
act
iceorar
est
ri
cti
vet
radepr
act
icehasbeenadopt
edbyanyt
raderorser
vice
pr
ovider
;

t
hegoodsboughtbyhi
m oragr
eedt
obeboughtbyhi
m suf
ferf
rom oneormor
edef
ect
s;

t
heser
viceshi
redorav
ail
edoforagr
eedt
obehi
redorav
ail
edofbyhi
m suf
ferf
rom def
ici
ency
i
nanyr
espect;

atr
aderortheserv
iceprov
ider
,asthecasemaybe,haschar
gedfort
hegoodsorf
ort
he
ser
vicesmenti
onedinthecomplai
nt,
apricei
nexcessoft
hepri
ce-
f
ixedbyorunderanyl
awf
ort
het
imebei
ngi
nfor
ce;

di
spl
ayedont
hegoodsoranypackagecont
aini
ngsuchgoods;

di
spl
ayedont
hepr
icel
i
stexhi
bit
edbyhi
m orunderanyl
awf
ort
het
imebei
ngi
nfor
ce;

agr
eedbet
weent
hepar
ti
es.

Goodswhi
chwi
l
lbehazar
doust
oli
feandsaf
etywhenusedar
ebei
ngof
fer
edf
orsal
etot
he
publ
ic-

i
ncontr
avent
ionofanyst
andardsrel
ati
ngtosafetyofsuchgoodsasr
equi
redt
obecompl
i
ed
wi
th,
byorunderanylawfort
hetimebeinginforce;

i
fthetradercoul
dhav
eknownwi
thduedi
l
igenceoft
hatt
hegoodssoof
fer
edar
eunsaf
etot
he
publ
ic.

Servi
ceswhi
charehazar
dousorl
ikel
ytobehazar
doustoli
feandsaf
etyoft
hepubl
icwhen
used,ar
ebei
ngoffer
edbytheser
vicepr
ovi
derwhichsuchper
soncoul
dhaveknownwit
hdue
di
li
gencetobei
njuri
oust
olif
eandsafet
y.

-Acom­pl
aintmustcont
ainanyoft
hef
oll
owi
ngal
l
egat
ions:

(
a) Anunf
airt
radepr
act
iceorar
est
ri
cti
vet
radepr
ac­t
icehasbeenadopt
edbyanyt
rader
;
 Exampl
e:Asoldasixmonthsol
dcart
oBr epr
esent
ingittobeanewone.Her
eBcan
makeacompl
aintagai
nstAf
orfoll
owi
nganunf
airtr
adepract
ice.

(
b)Thegoodsboughtbyhi
m oragr
eedt
obeboughtbyhi
m suf
ferf
rom oneormor
edef
ect
s;

Exampl
e:Aboughtacomputerf
rom B.I
twasnotwork­ingpr
operl
ysi
ncedayone.A
canmakeacompl
aintagai
nstBf
orsuppl
yi
nghim adef
ect
ivecomputer
.

(c) Theserv
iceshir
edorav
ail
edoforagr
eedt
obehi
redorav
ail
edofbyhi
m suf
ferf
rom
defi
ciencyi
nanyrespect
.

Example:
Ahiredservi
cesofanadvocat
etodefendhimsel
fagai
nsthi
slandl
ord.The
advocatedi
dnotappearev
eryti
met hecasewasschedul
ed.Acanmakeacompl ai
ntagainst
theadvocat
e.

(d)At r
aderhaschargedfort
hegoodsmenti
onedinthecomplai
ntapr
icei
nexcessofthe
pri
cefixedbyorunderanylawfort
hetimebei
nginfor
ceordispl
ayedonthegoodsorany
packagecontai
ningsuchgoods.

Exampl
e: Aboughtasackofcementf
rom Bwhochar
gedhim Rs.100ov
erandabov
e
ther
eservepr
iceofthecementde­clar
edbytheGover
nment.Her
eAcanmakeacompl ai
nt
agai
nstB.

Par
a1.
3

CONSUMERPROTECTI
ONACT
2.
10

(e)Goodswhichwillbehazar
doustoli
feandsafet
ywhenused,arebeingoffer
edforsalet
o
t
hepubli
cincontr
avent
ionoftheprov
isi
onsofanylawfort
hetimebeinginforcerequi
r­ing
t
rader
stodispl
ayinf
ormati
oninregar
dtothecontent
s,mannerandeffectofuseofsuchgoods.

Exampl
e:Aboughtat i
nofdisi
nfectantpowder.I
thadli
dwhichwastobeopenedina
speci
fi
cmanner.Tr
aderdidnoti
nform.Aaboutt his.Whi
leopeni
ngthel
i
dinordi
naryway,some
powderflewi
ntheeyesofAwhichaffectedhisvisi
on.HereAcanmakeacomplaintagai
nstt
he
tr
ader.

3.Expl
aint
hedoct
ri
neofI
ndoorManagementandexcept
iont
other
ule.

Thedoct
ri
neofindoormanagement
,alsoknownasTurquandrul
eisa150-
yearol
dconcept
,
whi
chprotect
stheoutsi
der
sagai
nsttheacti
onsdonebythecompany.

Anyper sonwhoent ersint

oacont r
actwit
ht hecompanyshallensur
ethatthet
ransact
ionis
authori
sedbyt hearti
clesandmemor andum ofthecompany.Thereisnorequi
rementtolook
i
ntot heint
ernali
rr
egularit
ies,
andevenifthereareanyi
rr
egulari
ti
es,t
hecompanyshallbeheld
l
iablesincethepersonhasact edonthegroundsofgoodfai
th.

Toabsorbtheconceptoft
hisdoct
ri
ne,i
tisi
mportantt
ounderst
andtheconceptoft
hedoct
ri
ne
ofconstr
ucti
venoti
ce.Bot
htheconceptofi
ndoormanagementandconstr
ucti
venoti
cei
s
expl
ainedbel
ow.

Doct
ri
neofConst
ruct
iveNot
ice

Section399oft heCompani esAct ,

2013stat
esthatanyper
sonmay ,af
terpaymentoft
he
prescri
bedf eesinspectbyelectr
onicmeansanydocumentskeptwit
htheRegistr
arof
Compani es.Anyper soncanalsoobt ai
nacopyofanydocumentincl
udi
ngt hecer
ti
fi
cat
eof
i
ncor por
ationfrom theRegi
st r
ar.
I
nlinewit
hthisprovi
sion,t
heMemor andum ofAssociati
onandtheAr
ti
clesofAssoci
ati
onar
e
publi
cdocumentsoncet heyaref
il
edwiththeRegist
rar.Anyper
sonmayi nspectt
hesameaf
ter
paymentofthefeesprescri
bed.

Thespecial
resolut
ionsar
eal
sor
equi
redt
ober
egi
ster
edwi
tht
heRegi
str
arundert
he
CompaniesAct,2013.

Thedoctr
inepr
esumest hatev
erypersonhasknowledgeoft
hecontent
softheMemorandum
ofAssoci
ati
on,Ar
ti
clesofAssoci
ati
onandev er
yotherdocumentsuchasspeci
alr
esol
uti
onsas
i
tisfi
ledwit
htheRegist
rarandavai
labl
eforpubl
icview.

Thispri
ncipl
ehasbeenupheldint
helandmarkcaseofOakbankOilCo.V.Cr
um (
1882)8A.C.
65.
Thus,i
fanypersonenter
sintoacontr
act,whi
chisi
nconsi
stentwi
ththecompany’
s
Memor andum andArt
icl
e,heshal
lnotacqui
reanyr
ight
sagainstt
hecompanyandshall
bear
theconsequenceshi
mself.

Or
igi
nofDoct
ri
neofI
ndoorManagement

Thedoctri
neorigi
natedfrom thelandmar kcaseRoy al Brit
ishBankVTur quand( 1856)6E&B
327.Thefactsofthecasear easf ol
lows.TheAr ti
clesoft hecompanypr ov i
defort heborr
owing
ofmoneyonbonds, whi
chr equi
resar esolut
iontobepassedi nt heGeneralMeet i
ng.The
di
rector
sdidacquiretheloanbutf ai
ledtopasst her esolution.Therepaymentonl oandefaul
ted,
andthecompanywashel dliabl
e.Theshar eholder
sr efusedt oacceptthecl ai
mi nt heabsence
oftheresol
uti
on.Held,t
hecompanyshal lbel i
ablesincet heper sondealingwiththecompanyi s
enti
tl
edtoassumet hattherehasbeennecessar ycompl iancewi thregardstothei nter
nal
management .

Therulewasf urt
herendor sedbytheHouseofLor dsinMahonyVEastHol yfordMi ni
ngCo.
[
1875]LR7HL869.6.I nt hiscase,t
heAr ti
clesofthecompanyprov idedthatthechequeshal l
besignedbyt wodirect
orsandcount er
signedbyt hesecr
etar
y.I
tlatercamet ol i
ghtthatnei
ther
thedir
ectorsnorthesecret arywhosignedt hechequewasappointedpr oper
ly.Held,theper
son
recei
vingsuchchequeshal lbeent
it
ledtot heamountsincetheappoi nt
mentofdi rect
orsisa
partoftheint
ernalmanagementoft hecompanyandaper sondealingwi t
hthecompanyi snot
requi
redtoenquireaboutit .
Theabovevi
ewheldinthecaseofHouseofLordsinMahonyVEastHoly
f or
dMini
ngCo.i
s
suppor
tedbySect
ion176oftheCompaniesAct,2013,
whichstat
est
hatthedef
ect
sinthe
appoi
ntmentoft
hedir
ectorshal
lnoti
nval
idat
etheactsdone.

Thedoctri
neprovidesthethi
rdpart
ieswhoenteri
ntoacontractwit
hthecompanyi sprot
ected
agai
nstanyirr
egulari
ti
esintheint
ernalpr
ocedur
eofthecompany .Thethi
rdpart
iescannotfi
nd
outi
nter
nal i
rr
egulari
ti
esthatt
akeplaceinacompany,hencethecompanywi l
lbeli
ableforany
l
osssuffer
edbyt hem duetotheseirr
egul
ari
ti
es.

Thedoct ri
neofconst
ruct
ivenot
icepr
otect
sthecompanyagai
nstthecl
aim oft
hir
dpart
ies
whilethedoctr
ineofi
ndoormanagementprotect
sthet
hir
dpart
iesagai
nstthecompany
procedures.

Except
ionst
otheDoct
ri
neofI
ndoorManagement

Li
stedbelowar etheexcept
ionst
othedoctr
inethathavebeenj
udici
all
yest
abli
shed,whi
ch
provi
decircumstancesunderwhi
chthebenefi
tofindoormanagementcannotbeclai
medbya
persondealingwit
hthecompany.

Knowl
edgeofI
rr
egul
ari
ty

Thisr uledoesnotapplytocircumst
anceswher ethepersonaf fectedhasactual orconstr
uctiv
e
noticeoft heir
regul
ari
ty.InHowardVPatentIvoryManuf actur
ingCompany( 1888)38ChD156,
theAr ticl
esofthecompanyempower edthedir
ectorstobor r
owupt o1,000pounds.Thel i
mit
couldber ai
sedprovi
dedconsentwasgi v
eni ntheGeneral Meeting.Withouttheresoluti
on
beingpassed, thedi
rectorstook3,
500poundsf rom oneoft hedirector
swhot ookdebentures.
Held, thecompanywasl iabl
eonlytotheextentof1,
000pounds.Si ncethedirectorsknewt he
resolutionwasnotpassed, t
heycouldnotclai
m protect
ionundert heTur quand’srule.

Suspi
cionofI
rr
egul
ari
ty

I
ncaseanypersondeal
i
ngwiththecompanyi
ssuspici
ousabouttheci
rcumstancesr
evol
vi
ng
ar
oundacontr
act,t
henheshal
lenquir
eint
oit
.Ifhef
ail
stoenqui
re,hecannotrel
yonthi
srul
e.

I
nthecaseofAnandBi
har
iLal
VDi
nshaw&Co,
(1946)48BOMLR293,
thepl
aint
if
faccept
eda
t
ransf
erofproper
tyfr
om t
heaccount
ant.TheCourthel
dthattheplai
nti
ffshouldhaveacquir
ed
acopyofthePowerofAtt
orneyt
oconfi
rmt heaut
horit
yoftheaccountant.Thus,
thetr
ansfer
wasconsi
deredvoid.

For
ger
y

Transact
ionsi nvolv
ingforgeryarev oi
dabi niti
o(nullandv oid)sinceiti
snott hecaseof
absenceoff reeconsent ;
iti
sasi tuati
onofnoconsentatal l.Thi
shasbeenest abl
ishedinthe
RubenVGr eatFingallConsoli
datedcase[ 1906]1AC439.Aper sonwasi ssuedashar e
cert
ifi
cat
ewi t
hacommonseal ofthecompany .Thesi gnatureoftwodirectorsandt he
secret
arywasr equir
edforav ali
dcer t
if
icate.Thesecr etarysignedthecerti
ficat
einhi sname
andalsof orgedthesignaturesoft hetwodi r
ectors.Thehol dercontentedthathewasnotawar e
oftheforgery,andhei snotrequiredtolooki ntoit
.TheCour theldthatthecompanyi snotl
iabl
e
forfor
gerydonebyi tsoffi
cers.

404Ent
repr
eneur
shi
p&PM

Tot
alMar
ks–20

1)Expl
aint
her
oleofent
repr
eneuri
ntheeconomi
cdev
elopmentoft
hecount
ry.Whatar
ethe

di
ff
erentchar
act
eri
sti
csofanent
repr
eneur
?

2)Expl
aint
het
erm Ent
repr
eneur
shi
pDev
elopment
.Whati
sEDP?El
abor
ateaboutt
heobj
ect
ives
&

i
mpor
tanceofEDP.
1)Expl
aint
her
oleofent
repr
eneuri
ntheeconomi
cdev
elopmentoft
hecount
ry.Whatar
ethe

di
ff
erentchar
act
eri
sti
csofanent
repr
eneur
?

I
mport
antr
olet
hatent
repr
eneur
shi
ppl
aysi
ntheeconomi
cdev
elopmentofoureconomy(
Indi
a)
ar
e:

1.I
mpr
ovementi
nPerCapi
taI
ncome:

ADVERTI
SEMENTS:

Ent
repreneur
slocat
eandexpl oi
topport
uni
ti
es.Theyconver
tthel
atentandi
dler
esour
cesl i
ke
l
and,l
abourandcapitalint
onati
onali
ncomeandweal thi
nthefor
m ofgoodsandserv
ices.They
hel
pincreaseNetNationalPr
oductandPerCapit
aIncomeinthecountr
y.

2.Gener
ati
onofEmpl
oyment
:

Entrepr
eneurgenerat
eempl
oymentbot
hdir
ect
lyandi
ndir
ect
ly.Byst
art
ingt
hei
rbusi
nesst
hey
presentanopportuni
tyt
oot
her
sforworkbyof
fer
ingj
obs.

3.Bal
ancedRegi
onal
Dev
elopment
:

Entr
epreneur
shelptoremovetheregi
onal
dispari
ti
esintheeconomicdev
elopmentofar
eas.
Theysetupindust
ri
esinbackwardareast
oav ai
lvar
ioussubsti
tut
esandbri
ngupthe
devel
opmentofthatregi
on.

4.I
mpr
ovementi
nLi
vi
ngSt
andar
ds:

Entr
epr
eneursetupi
ndust
rywhi
chi
ntroducenewproduct
sonamassscal
e.Theyar
eatl
ower
cost
sandthishel
pstoi
mprovet
hestandardofl
if
eofacommonman.

5.Economi
cIndependence:

Entr
epreneur
shi
pisessent
ialf
ornati
onalself
-reli
ance.I
ndust
ri
ali
stshel
ptomanufact
ure
substi
tut
esofimpor
tedproduct
stherebyreducingdependenceonforei
gncount
ri
es.These
busi
nessmenal
soexpor
tpr
oduct
sther
ebyear
ningf
orei
gnexchangef
ort
hecount
ry.

Ent
repreneurshi
pdoesnotemer geandgr owspontaneously.Therearevari
ousfactorshav
ing
bot
hposi t
iveandnegati
veinf
luenceonthegr owthofentrepreneurshi
p.(
Posit
iveinfl
uence
i
mplyfacil
itat
ingandconduci
veconditi
onswher easnegativeinfl
uencesref
ertofactors
i
nhi
biti
ngt heemergenceofentrepr
eneurshi
p).

Rol
eofEnt
repr
eneur
sinEconomi
cDev
elopmentofCount
ry

RoleofEnt
repr
eneur
sineconomi
cdev
elopmentofacount
ryar
edi
scussedundert
hef
oll
owi
ng
headi
ng.

1.Empl
oymentoppor
tuni
ti
es

Entr
epreneursemploylabourf
ormanagi
ngthei
rbusi
nessact
ivi
ti
esandpr
ovi
desempl
oyment
opport
uniti
estoalargenumberofpeopl
e.Theyr
emoveunemploymentpr
obl
em.

2.Bal
ancedRegi
onal
Dev
elopment

Gov ernmentpr
omot esdecentral
izeddevel
opmentofindustr
iesasmostoftheincenti
vesar
e
grantedforest
abli
shingindustri
esinbackwar
dandrur al
areas.Thus,
theentr
epreneurst
oavai
l
thebenefit
sestabl
ishindustr
iesinbackwardandrur
al ar
eas.

Theyr emoveregionaldispar
it
iesandbringbalancedr egi
onaldevel
opment.Theyalsohel pto
reducetheproblemsofcongest ion,
slums,sanitat
ionandpolluti
oninci
ti
esbypr oviding
empl oymentandincomet opeoplel
ivi
nginruralareas.Theyhelpini
mprovingthest andardof
l
ivingofthepeopleresidingi
nsuburbanandr uralareas.

3.Mobi
l
izat
ionOfLocal
Resour
ces

Entr
epreneur
shel ptomobili
zeandutil
i
zelocal
resourcesli
kesmallsavi
ngsandtal
entsof
rel
ati
vesandf r
iends,whi
chmi ghtot
herwi
seremainidleandunut
il
ized.Thust
heyhelpin
eff
ecti
veutil
i
zationofresour
ces.
4.Opt
imi
zat
ionOfCapi
tal

Ent
repr
eneursai
mt ogetqui
ckret
urnoni
nvest
ment
.Theyactasast
abi
l
izi
ngf
orcebypr
ovi
ding
hi
ghoutputcapi
tal
rat
ioaswell
ashighemploy
mentcapi
tal
rat
io.

5.Pr
omot
ionofExpor
ts

Entr
epr
eneur
sreducethepressur
eont hecountr
y’sbal
anceofpay
ment
sbyexpor
ti
ngt
hei
r
goodst
heyearnval
uablef
oreignexchangethr
oughexports.

6.ConsumerDemands

Ent
repr
eneur
spr
oduceawi derangeofpr
oduct
srequi
redbyconsumer
s.Theymeett
hedemand
oft
heconsumer
swithoutcreat
ingashor
tagef
orgoods.

7.Soci
alAdv
ant
age

Ent
repreneurshelpinthedevelopmentoft hesoci
etybyprovi
dingemploymenttopeopl
eand
pavesforindependentliv
ingTheyencouragedemocr acyandself
-gov
ernance.Theyar
eadepti
n
di
stri
buti
ngnat i
onalincomeinmor eeff
icientandequitabl
emanneramongt hevari
ous
par
tici
pantsofthesoci et
y.

8.I
ncr
easepercapi
tai
ncome

Entr
epreneur
shelptoincr
easethepercapi
tai
ncomeofthecountr
yinv
ari
ousway
sand
faci
l
itat
edevelopmentofbackwar
dareasandweakersect
ionsoft
hesoci
ety
.

9.Capi
tal
for
mat
ion

Acountrycanat tai
neconomicdev el
opmentonlywhent her
eismor eamountofinvestmentand
product
ion.Entrepr
eneurshelpinchannel
i
zingtheirsavi
ngsandsavingsofthepubli
cto
product
iveresourcesbyestabli
shi
ngenterpr
ises.Theypromotecapit
alfor
mationby
channel
izi
ngt hesavingsofpubli
ctoproducti
veresources.

10.Gr
owt
hofcapi
tal
mar
ket
Entr
epreneur
sraisesmoneyf
orrunni
ngt
heirbusi
nesst
hroughshar
esanddebentur
es.Tr
ading
ofsharesanddebentur
esbythepubl
i
cwit
ht hehel
poffi
nanci
alser
vicessect
orl
eadstocapi
tal
marketgrowth.

11.Gr
owt
hofi
nfr
ast
ruct
ure

Theinfr
astructuredevel
opmentofanycount r
ydetermi
nestheeconomi
cdevel
opmentofa
countr
y,Entrepreneur
sbyestabl
ishi
ngtheirenter
pri
sesi
nrural
andbackwar
dareasi
nfl
uence
thegovernmentt odevel
optheinfr
astr
uctureofthosear
eas.

12.Dev
elopmentofTr
ader

Entr
epreneursplayanimportantrol
einthepromoti
onofdomesti
ctradeandforei
gntr
ade.They
avai
lassistancefr
om vari
ousf i
nanci
ali
nsti
tuti
onsi
nthefor
m ofcashcredi
t,t
radecr
edit
,
over
draft,shortt
ermloans,securedl
oansandunsecuredl
oansandleadtothedevel
opmentof
thetr
adei nthecount
ry.

13.Economi
cInt
egr
ati
on

Entr
epr eneurreducestheconcentr
ationofpoweri naf ewhandsbycr eat
ingemployment
opportuniti
esandt hr
oughequitabl
edi st
ributi
onofi ncome.Ent repreneurspromoteeconomic
i
ntegrationinthecountrybyadopti
ngcer taineconomi cpolici
esandl awsf r
amedbyt he
government .Theyhelpinremovingthedi spar
itybetweent herichandt hepoorbyadopti
ngthe
rul
esandr egul
ati
onframedbyt hegov ernmentf ortheeffecti
vef unctioni
ngofbusinessint
he
country.

14.I
nfl
owofFor
eignCapi
tal

Entr
epreneurshel
ptoattr
actfundsf
rom i
ndi
vi
dual
sandi
nst
it
uti
onsr
esi
dingi
nfor
eign
countr
iesforthei
rbusi
nesses.

Char
act
eri
sti
cs

AboutVi
stage
Resear
ch&I
nsi
ght
s

Expl
orebycat
egor
y

LEADERSHI
P

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act
eri
sti
csofanent
repr
eneur

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ent
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eneur
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act
eri
sti
cs

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atar

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y2,
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ethi
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iendl
y,PDF&Emai
l

Ent
repr
eneur
s:bor
normade?

Whetheryou’
reaC-sui
tepr
oatal
argecompanywi
thhundredsofwor kersoryou’
ret
hefounder
ofastart
upthathasonl
yafewemploy
ees,
youcanbenef
itfrom t
hinkingli
keanentr
epr
eneur.

Whilesomebelievethatentrepreneur
sar ebornratherthanmade, anyonecanatl eastl
earn
someoft hecharacter
ist
icsthatmakeent r
epreneurswhatt heyare.Ther
ei snosingledef
ini
ti
on
ofwhatanent r
epreneuractuall
yis,butthet er
m usuall
yreferstosomeonewho, amongot her
thi
ngs,spear
headsav enture,makesdeci sionsonhowt oproceed,securesthecapit
alneeded
tomaket heventur
ear eali
ty,andshouldersmostoral loftheassociatedrisk.

Inordertothi
nklikeanent
repr
eneur
,youneedtohav
eordevelopt
hecharact
eri
sti
csofan
entr
epreneur.Readontofi
ndoutaboutent
repr
eneur
ial
ski
l
lsthatwil
lhel
pyouintheworkpl
ace.
Fr
eePDFGui
deJour
neyt
otheSummi
t:TheCEO'
s7LawsofLeader
shi
p

Gett
heGui
de

Mot
ivat
ion

ent
repr
eneurchar
act
eri
sti
cmot
ivat
ion

Entrepreneursar
ebynat uremot ivat
ed.Afterall
,theyputi nlonghour st ogettheirv
enturesoff
ofthegr oundandi nvestlargesums—somet imesev erythingtheyhav e—t opursuetheir
dreams.Theydoal lofthisknowi ngthatitcoul
dt akemont hsorev eny earsforthem topossi
bly
reapt hefrui
toftheirl
abor .Anddespitetheirhardwor k,t
heyknowt hatthereisachancet hat
theireff
ortswon’tber ewar dedwithmat eri
alsuccess.Yett heyrefuset ogiv ei
nt oafearof
fai
lure.Sostrongmot ivati
on, nottoment i
onast eelyfocus, i
sneededt ostickwithventur
esover
thelonghaul .

Passi
on

ent
repr
eneurchar
act
eri
sti
cpassi
on

Passionisanotherchar
acteri
sti
cofent repr
eneurs.Whil
eagoodpay dayattheendoft hetunnel
i
sgoodf ormot i
vati
on,entr
epreneurstendtobemor edri
venbyapassionforthei
rofferi
ngas
wellasbyadesi r
etomakeadi f
ference.Thispassionordri
vealsohel
pstosustain
ent
repreneursduri
ngperiodswheredi scouragementmightotherwi
semanifesti
tsel
f.

Vi
sion

ent
repr
eneurchar
act
eri
sti
cvi
sion

Thebestent r
epreneur
shaveav isi
onastowhatt heywantt oachieve,howt heycanaccompl i
sh
thei
robjecti
ves,andwhom theyneedont hei
rsidetoreachtheirgoals.Thei
rv i
sionactsl
i
kea
compasst hatpoint
sthem i
nt hedir
ect
ionofoppor t
uniti
esthatperhapsnooneel sehasfound.
Theyalsohav et
heabili
tyt
ot r
anslatet
heirvi
sioninawayt hatstaffandinvestorscan
underst
and.Throughnetworkingopport
uniti
es,ent
repreneurscanf i
ndpeopl etheywantt
oal i
gn
wi
th.

Conf
idence

ent
repr
eneurchar
act
eri
sti
cconf
idence

Wi t
houtconfi
denceorself-
beli
ef,
entr
epreneur
scannotpossi blysucceed.Theyhavetobe
conf i
dentbot
hinthemselvesandintheproduct
sorservicest heysell
.Ift
heybeli
evein
themsel v
es,t
heywillhav
et heabi
li
tyt
ostaythecourseregardlessdiffi
cul
tiesor
discouragement
.get.Theyalsohavethestomachtotaker i
sks—af t
erall
,theybel
iev
ethatt
hey
willsucceed.

Deci
sionMaki
ng

ent
repr
eneur
-char
act
eri
sti
c-deci
sion-
maki
ng

Beingabl etomakedeci sionsquickl

yisanimport
antcharacter
ist
icforentrepr
eneursbecauseit
canbet hedif
ferencebetweensuccessandf ai
l
ure.Entr
epreneursnotonlyneedt ohavegood
decision-makingskil
ls,
butal somusthavethecapaci
tytomaket hosedecisionsquickl
yinorder
toav oidmissingopportunit
ies.Thi
snecessi
tat
esquickl
yconsideri
ngt hefactsandthen
deciding.

Asy oucansee, ther

ear edefi
nit
elysomekeychar act
erist
icsofentrepr
eneurshi
p.Asal eaderat
yourcompany ,youcanuset heset r
ait
stomor ecapablyandconf i
dentl
yperformyourdut i
es.
Whet herentr
epreneursarebornormadei s,asittur
nsout ,nott
hekeyconsiderat
ion.What
real
lymat t
ersisthatleader
sacquireordevelopthewinningcharacteri
sti
csofanentrepreneur
.

1.Vi
sion

Everyvent
urestart
swit havi
sion.Whatareyourdr
eamsf orthebusinessyou’r
ebuildi
ng?How
wil
lthewor l
dbediff
erentbecauseofyourproduct
,ser
vice,oror
ganizati
on?Av isi
onstatement
i
sagr eattoolt
ohelpy oucommuni cat
eyourhopestoyouraudience,anditcankeepy ouand
youremployeesfocusedont heessent
ial
s.
Oncey ouhav ewr appedy ourgrandvisi
onintoat i
dypackage,spelloutyourpl
ant oachi
evethat
l
oftyideal.Convertthatpieintheskyt opr
act i
calst
epsbyl ayi
ngouty ourbusi
nessgoals.I
t’
s
OKt ochallengey oursel
fhere,butyourbusinessgoalsshouldbeSMART( Specif
ic,Measur
able,
Att
ainable,Relevant,andTime-bound)andcl earl
yti
edtoy ourvisi
onstatement.

Bot
hthesef
oundat
ional
tool
swi
l
lbecr
it
ical
asy
oust
artt
obui
l
dyourbr
and.

2.Passi
on

Thetermisoverusedandoftenabused,butpassi
onisacharacter
ist
ictrai
toftheentr
epreneur.
Youhav et
ocareaboutwhaty ou’
redoing.Thesweetl
ureoffil
thyl
ucrewi l
lnotgetyouthrough
thetoughti
mes.Ifmakingmoneyistheonl yr
easonyouhavetogoi ntobusinessfory
our sel
f,
digdeeper
.Notev er
ynewv ent
urewil
lcurecancerorendworldhunger,butyouneedat ruly
human“ why”behi
ndy ouref
for
ts.

Yourbusi
nessshouldbeal
ignedwit
hsomet hi
ngthatresonateswithyou.Thatdoesn’tmean
you’
ll
begetti
ngpaidtodoyourfav
orit
eacti
vit
yalldaylong,sadl
y,buthavi
ngabusi nessrel
ated
tosomethi
ngyou’ddoforf
reeisarealadv
antage.

I
fclassi
ccar
sr evyourengi
ne,
autorepai
rorcardetai
li
ngmightnotbe9-
to-
5dr
udgery
.Ifyou
l
ovegardeni
ng,openingupaplantshoporf
lor
istserv
icemakessense—andwit
htime,i
tmay
j
ustmakedollarsaswell
.

3.Mot
ivat
ion

Let
’sbecl
ear:
It’
sal
mostalwayseasi
ertobeanemployee.Sur
e,t
her
e’sacer
taincacheti
n
bei
ngyourownboss,butgl
amourwon’tpayt
hebi
ll
s,andtheworkwon’tdoi
tsel
f.

Noonewillshoveyououtofbedearl
yever
ydayorgiveyoubrowniepoi
ntsforbur
ningthe
midni
ghtoi
l.Runni
ngabusinessi
shardwork,andi
tmaybeawhi l
ebefor
ey ouref
fort
sbear
f
ruit
.Theoddsofyourenter
pri
sesurvi
vi
ngit
sfir
stf
iveyearsi
nbusinessareabout50/50—and
t
hat’
snotbecausehalfofal
lbusi
nessownerssi
mplygiveup.
Onewayt oboosty oursuccessratei
sbycontrol
l
ingcosts.Home- basedbusi
nessesand
i
nfopreneur
stypicall
yhavelowerexpensesandturnaprofi
tquicker.Andstar
ti
nganonl ine
busi
nesscant r
imr i
skandov erhead,
too.Nomatterwhatapproachy outake,t
hough, y
ou’l
lhav
e
tohavesomethingext r
ainyourmot i
vat
ional
gastanktokeepgoi ngwhent heinev
itabl
e
chal
lengesari
se.

4.Ri
sk-
taki
ng

Areyoucomfortablewi
thri
sk?Beingyourownbossr ateshighontherewardspect
rum,butt
he
fl
ipsi
deofthatcoinisri
sk,
andy ouhavetobecomf ort
ablewithit
.Thatri
sk-embr
acing,
vent
uresomeattit
udeisaquint
essenti
alaspectoft
heent r
epreneuri
almindset
.

Whetheryou’
relaunchi
ngamassiveenterpri
seordippi
ngat oeinthewaterasasol
opr
eneur,
you’
llhav
esetbacks.Beprepar
edforcashf l
owissues,suppl
iergl
i
tches,
employeemel
tdowns,
economictur
ndowns, andyes,
evenglobalpandemics.

Andbepr eparedt
ofai
l.I
fyourbusi
nessdoesn’
tstayafloat,
thatdoesn’
tmeany our
ent
repreneuri
aldr
eamsaredashed.Maybeitwasthewr ongidea,thewrongapproach,or
merel
yt hewrongti
me.Doat hor
oughpostmortem onyourdear l
ydepar
tedandlearnhowt ofai
l
bet
ternextti
me.AsWi nst
onChurchi
llf
amouslyquipped,“Successisj
uststumbli
ngfrom fai
l
ure
tof
ail
urewi t
hnolossofenthusi
asm.”

5.Cur
iosi
ty

Doyouthi
nkyouknowever
ythi
ngt
herei
stoknowabouty
ourbusi
nessar
ea?I
fyousai
dyes,
youmaybeshort
changi
ngyour
sel
f.

Anessentialtrai
tofsuccessfulentr
epreneursist
oalway sdomor e,anddoi tbetter
.Evenif
you’
rewor l
d-renownedi nyourareaofexperti
se,you’
ll
alwaysfindsomet hi
ngmor etol
earn
aboutmanagi ngy ourbusi
nessef f
ecti
vely
.Asuper i
orproductcanstil
lfal
lshortifyour
marketi
ngi sn’
teffecti
ve(Betamax,anyone?).Andhowconf i
dentarey ouwheni tcomest o
keepi
ngy ouraccount sstr
aightandyourtaxesinorder?

Knowi
ngyoudon’tknowital
li
sagr eatst
art
ingpoi
nt.Youcanal
way
shiretheexper
ti
sethatyou
l
ackorl
etyouraccount
antorbusi
nesssoftwaret
acklesomeoft
hebookkeepi
ng.Meanwhil
e,
keepl
ear
ning.

6.Cr
eat
ivi
ty

Theentrepreneur'
spersonal
i
tyiscreati
ve.I
n1985, whenSteveJobswasforcedoutoft
he
companyheco- f
ounded,hedidn’
tgiveup.Inst
ead,hetri
edsomethi
ngdiff
erent
:ani
mati
on.Wi
th
a$10mi ll
ioninvest
ment ,
heshift
edthemov i
elandscapeandmadePixarahousehol
dname,
pocket
ingani ce$7.5bil
li
oninprofi
tsalongtheway .

AVenndi
agr
am showi
ngwher
ethecompet
it
iveadv
ant
agei
s.

Acreat
ivemindsethel
psy
oul
ookpastt
hecompet
it
ionandf
indnewway
stoser
vey
our
cust
omers.

Creat
ivi
tyhel
psy ouspotbusinessopportunit
iesi
neverydayl
if
e.Don’
tsi
mplytr
yto
i
ncrementall
yedgeoutt hecompetit
ion.Inst
ead,al
way saskhowyourpr
oductorser
vicecoul
d
bebetter
.Makesur ecreati
vi
tyisbui
ltint
oy ourworkf
low.Andrewar
dteam memberswill
ingt
o
br
eakaf ewrulesinthenameofi nnovati
on.

7.Conf
idence

Pr
idegoet
hbeforeafall
,butyoucanneverhav
etoomuchconfidence.I
fyou’
vel
aidt
he
gr
oundworkbyestabl
i
shingyourvi
sionstat
ementandbusi
nessgoals,y
ouhaveasoftpl
acet
o
l
andwhenthegoinggetsrough.

You’
llhavedays(orweeks,ormont hs)whenthingsdon’
tgosmoot hl
y,pr
obl
emsseem
over
whelming,andy ourworkjusti
sn’t“
fun”anymore.Butremindyoursel
fwhyy
outookont
his
chal
lengeinthefi
rstplaceanddon’tunderv
alueyourbestasset:You!

Simplystart
ingyourownbusi nessputsyouinaneli
tecadreofthedari
ngandcapabl e.You
havespottedanoppor t
unityandseizedit
.Confi
denceisonepersonalcharact
eri
sti
ct hatcanbe
cult
ivat
ed.Ifyouhavetimeswheny ou’
refeel
i
ngoutofy ourl
eague,fal
lbackonyourcor e
str
engthsandbui l
dfrom there.Youalr
eadyknowplent
yabouty ourbusiness,
andyoucanl ear
n
anyskil
lsyoumi ghtbelacking.
Breakdownobst acl
esintobi
te-
sizechunksandtackl
ethem oneatati
me.Bet t
eryet,
seethe
opportuni
tyhi
ddenbehindeveryobstacl
e.Forexample,
womenent r
epreneur
sof t
enface
addit
ionalhur
dlesingett
ingest
abli
shed,butthi
scancreat
eaclimatewheresuccessful
women
will
sharethei
rsecret
sandment orthosejustst
art
ingout.

Expl
aint
het
erm Ent
repr
eneur
shi
pDev
elopment
.Whati
sEDP?El
abor
ateaboutt
heobj
ect
ives&

i
mpor
tanceofEDP.

Ent
repr
eneur
shi
pDev
elopmentPr
ocess

Ent
repr
eneurshi
pdevelopmentisthemeansofenhancingtheknowledgeandskil
lof
ent
repr
eneursthr
oughsev er
alcl
assroom coachi
ngandprograms,andtr
aini
ng.Themainpoi
nt
oft
hedevelopmentprocessistostr
engthenandincr
easethenumberofentrepr
eneur
s.

Thisentrepreneurdevel
opmentpr
ocesshelpsnewfir
msorventuresgetbett
erinachi
evingthei
r
goals,
impr ovebusinessandt
henation’
seconomy.Anot
heressenti
alf
actorofthi
sprocessis
toimprov ethecapacit
ytomanage,devel
op,andbui
ldabusi
nessenterpr
isekeepi
nginmi ndthe
ri
sksrelatedtoit.

Insi
mplewor ds,t
heent
repr
eneurshi
pdev elopmentprocessisaboutsupporti
ngent
repr
eneur
s
t
oadvancetheirski
ll
swit
hthehel
poft r
ainingandcoachingcl asses.I
tencour
agest
hem to
makebett
erjudgmentsandtakeasensi
bledeci si
onforallbusinessacti
vi
ti
es.

Ent
repr
eneur
shi
pDev
elopmentPr
ogr
am

Entrepreneurshi
pDev elopmentPr ogramme( EDP)isapr ogrammewhi chhelpsindev elopi
ng
entrepreneuri
alabil
it
ies.Theskill
st hatarerequir
edt orunabusi nesssuccessfull
yisdev el
oped
amongt hestudentsthroughthispr ogramme.Somet i
mes, studentsmayhav eskill
sbuti t
requirespoli
shingandi ncubati
on.Thi sprogrammei sper f
ectf ort
hem.Thisprogr amme
consistsofast ruct
uredt r
aini
ngpr ocesst odevel
opani ndividualasanentrepreneur.Ithel
ps
theper sontoacquireskill
sandnecessar ycapabil
it
iestoplayt herol
eofanent repreneur
effectiv
ely.
EDPi sanef fortofconv er
tingapersont oanent r
epreneurbypassinghimthroughthoroughly
str
uctur edtrai
ning.Anent r
epreneurisrequir
edt orespondappropri
atel
ytothemar ketand
he/shei salsorequiredtounder st
andthebusi nessneeds.Theskil
lsneededar evari
edandt hey
needt obet akencar einthebestpossibleway .EDPi snotj
ustatraini
ngprogrammebuti ti
sa
compl eteprocesst omaket hepossi
bletransformati
onofani ndi
viduali
ntoanent r
epreneur.
Thispr ogrammeal sogui destheindi
vidualsonhowt ostar
tthebusinessandef f
ecti
veway sto
sustai
ni tsuccessfully
.

Obj
ect
ivesofEDP

Theobjecti
veofthi
sprogr
ammei stomotiv
ateanindi
vidualt
ochooset heentr
epreneurshi
pas
acareerandtoprepar
ethepersont
oexploi
tthemarketopportuni
ti
esforownbusi ness
successf
ull
y.Theseobj
ecti
vescanbesetbothi
ntheshor t
-t
erm andlong-
ter
m basis.

Shor t
-t
erm objecti
ves:Theseobj ecti
vescanbeachi ev
edimmediatel
y.Intheshort-t
erm,t
he
i
ndiv i
dualsaretrai
nedt obeanent r
epreneurandmadecompet entenoughtoscant heexist
ing
mar ketsit
uati
onandenv i
ronment .Theper son,whowouldbethefut
ureentrepreneur,
shoul
d
fi
rstsetthegoal asanent repreneur.Theinformati
onrel
atedt
otheexisti
ngrulesand
regulati
onsisessentialatthisstage.

Long-ter
m objecti
ves:
Theul t
imat
eobjecti
veist
hatt
hetr
ainedi
ndivi
dualssuccessful
l
y
establi
shthei
rownbusi nessandtheyshoul
dbeequi
ppedwithal
ltherequi
redskill
storunt
hei
r
businesssmoot hl
y.

Theoveral
lobj
ecti
vesofEDParemai
nlyt
ohel
pinther
api
dgrowthoftheeconomybysuppl
yi
ng
ski
ll
edentr
epreneurs.Thi
spr
ogr
ammeprimar
il
yai
msatprov
idi
ngself
-employmentt
othe
younggenerat
ion.
I
mpor
tance

1.
Creat
ionofEmpl
oymentOppor
tuni
ti
es

Unempl oy mentisoneofthemosti mportantpr obl

emsconfronti
ngdevel
opingand
underdev el
opmentcountries,
EDP’senablepr ospecti
veentr
epreneur
sinthesetti
ngupofthei
r
ownuni ts,thusenabl
ingthem togetselfempl oyment.Wit
hthesetti
ngupofmor eandmor e
unit
sbyent repr
eneur
s,bothonsmal landlargescale,numerousjobopport
unit
iesar
ecreated
fortheot hers.

Entrepreneurinthi
swaygetanoppor tunit
ytoleadani ndependentandhonor ablelif
eandatthe
samet imet heyenableothersi
nget t
inggainful employment .Severalschemesli
keNehr u
RozgarYoj na,NationalRur
alEmploymentPr ogr amme( NREP) ,
Integrat
edRuralDev el
opment
Programme( IRDP)etc.havebeeninit
iatedbyt hegov ernment,ofIndiainthi
sdirecti
on.The
thrustofalltheseschemesi st
oeliminatepov ertyandgener ategainfulemployment
oppor t
uniti
esf ort
heunempl oy
ed.Thusent repreneurcanpl ayanef fecti
verolei
nr educi
ngthe
problem ofunempl oyment.

2.Capi
tal
For
mat
ion

Iti
snotpossi bl
etosetupanent erprisewi t
houtadequatefunds.Entrepreneurasanor ganizer
offactorsofproducti
onempl oyshi sownaswel lasborrowedr esourcesf orthesett
ingupof
hisenterpri
se.Entr
epreneurmobi l
izesi dl
esav i
ngsofthepubl i
candputt hem toproductiveuse.
Inthi
swayhehel psincapitalf
ormat ion,whichissoessentialfortheindustri
alandeconomi c
developmentofacount ry.Vari
ousdev elopmentbankslikeICICI,I
FCI,IDBI;SFCs,SIDCst ake
i
niti
ativ
ei npromotingentrepr
eneur shipthroughassist
ancet ovari
ousagenci esinvolvedinEDP
andbypr ovidi
ngfinanci
alassistancet onewent repr
eneurs.

3.
Bal
ancedRegi
onal
Dev
elopment

Smal l
scaleunitscanbesetupinindust
ri
all
ybackwardandremoteareaswit
hli
mi t
edfinanci
al
resources.Successf
ulEDP’sassi
sti
nacceler
ati
ngthepaceofindust
ri
ali
zat
ioninthebackward
areasandr educetheconcent
rati
onofeconomicpowerint
hehandsofaf ew,Entr
epreneurs
feell
i
ketakingadv antageoft hevari
ousconcessionsandsubsi diesoff
eredbyt hest
ateand
centr
algovernment .Successst or
yofentrepreneur
ssetrightexampleforot her
stofoll
owand
thi
sacceler
at est
hepaceofi ndustri
ali
zat
ioninthebackwar dareas.Sett
ingupofmor eunit
s
l
eadst omor edevelopmentofbackwar dareasandbalancedregionaldev el
opment.

4.UseofLocal
Resour
ces

I
nt heabsenceofanyi ni
ti
ati
velocalresourcesarelikelytoremainunutil
ized.Pr operuseof
theser esourcescanr esul
tintheprogressordev elopmentoft hear eaandt hattooatl owercost
.
Alertentrepreneursseizetheopportunit
yandexpl oititinthebestinter
estsoft heareaand
i
ndust ry.Eff
ectiveEDPscanhel pinthepr operuseofl ocal r
esourcesbypr ovidi
nggui dance,
assistance,educationandt r
aini
ngtot heprospectiveent r
epreneurs.

5.
Impr
ovementi
nperCapi
tal
Income

Entrepreneursareal waysont helookoutforopportuni

ti
es.Theyexpl or
eandexpl oi
tthe
oppor t
uniti
es.Entrepreneurstakeleadinorgani
zingvari
ousf actor
sofpr oduct
ionbyput t
ing
them intoproduct i
veuset hr
ought hesetti
ngupofent erpri
ses.Moreenterpri
seswilll
eadt o
mor eproduct i
on,empl oymentandgener ati
onofweal t
hi ntheform ofgoodsandserv i
ces.Itwil
l
resulti
nt heincreaseintheov eral
lproduct
ivi
tyandpercapi tai
ncomei nthecountry
.EDPspl ay
aposi t
iveroleintheset t
ingofmor eunitsandthushelpi ngenerat
ionofmor eemploymentand
i
ncome.

6.
Impr
ovementi
ntheSt
andar
dofLi
vi
ng

Entrepreneursbyadoptinglat
estinnovat
ionshel pintheproducti
onofwi devar
ietyofgoods&
services.Bymakingef f
ici
entuseoft her
esour ces,t
heystartproduci
ngmor eofbetterquali
ty
andt hattooatlowercosts.Thisenablethem toensur eeasyavail
abil
it
yofbetterquali
ty
product satl
owerpr i
cestotheconsumer swhi chresulti
ntheimpr ovementint
hest andardof
l
ivingoft hepeople.EDPsprovidethenecessar ysupportt
oentrepreneursbyeducatingthem
aboutt helat
estinnovati
onsandmar kettrends.

7.
Economi
cIndependence
Entrepreneursenableacountryt oproducewi devarietyofbetterquali
tygoods&ser vi
cesand
thattooatcompet i
ti
vepri
ces.Theydev el
opsubst i
tutesofthegoodsbei ngimpor t
edandt hus
preventov er
-dependenceonf oreigncountri
esandatt hesamet imehel pinthesav i
ngof
preciousforeignexchange.Throughsal eoftheirsurplusproductsinforeignmar ket
entrepreneursenableacountryt oearnforei
gnexchange, whichissoessent ialf
ormeet i
ng
development alneedsoftheeconomy .Exportpromot i
onandi mpor tsubstit
utionthushelpin
promot ingeconomi ci
ndependenceoft heeconomy .

8.
Prev
ent
ingI
ndust
ri
alSl
ums

Industr
iall
ydevel
opedareasaref acedwi t
hproblem ofindust
rialsl
ums, whichresultinover
burdeningofcivi
cameniti
esandadv erseimpactont hehealt
hofpeopl e.Dispersalofindust
ri
es
canhelpi ntheover
comingoft hi
sgr aveproblem.EDPscanhel pinprev enti
ngspr eadof
i
ndust r
ialsl
umsbypr ovi
dingvari
ousi ncenti
ves,subsidi
esandi nfr
astructuralsupportto
entrepr
eneur sf
orsett
inguptheirenterpri
sesinindustri
all
ybackwar dar eas.Thiswillal
sohelp
i
nr educingpoll
uti
onandov er
taxingofcivicameni t
ies.

9.
Reduci
ngSoci
alTensi
on

Unempl oymentamongstt hey oungandeducatedpeoplei semergingast hemaj orcauseof

socialunrest
.Peopleareboundt ofeelfr
ust
rat
ediftheyf ail
togetgai nful
empl oymentaft
er
compl eti
onoftheireducati
on.EDPscanhelpinchannelizingthetalentofthissecti
onofsociet
y
i
nt her i
ghtdi
rect
ionbypr ovi
dingpropergui
dance,t
rai
ningandassi st
ancef orsett
ingupthei
r
enterpri
ses.Thi
sresultsingenerat
ionofsel
femploymentandpr event i
onofsocial t
ensi
on,
unrestetc.

10.
Faci
l
itat
ingOv
eral
lDev
elopment

Anent r
epreneuractsasacat al
yticagentforchangewhi chr esult
si nchainreact
ion.Wi
ththe
sett
ingupofanent er
pri
sethepr ocessofindustri
ali
zat
ioni ssetinmot ion.Thisunitwi
l
l
generatedemandf orvari
oust y
pesofi nputsrequi
redbyi tandt herewillbesomanyot heruni
ts
whichwi l
lrequi
retheoutputofthisunit.Thi
sleadstoov eralldevelopmentofanar eadueto
i
ncreaseindemandandset t
ingupofmoreandmor eunit
st her
e.Moreoversuccessofone
entr
epreneurset
stheri
ghttypeofexampl
eforother
stof ol
low.Ent
repreneurs,
thus,cr
eat
ean
envi
ronmentofenthusi
asm andconveyasenseofpurpose.Thisgi
vesfutureimpetustot
he
overal
ldevel
opmentofthatarea.

11.Hel
psi
nsear
chi
ngandexpl
oit
ingoppor
tuni
ti
es

Therearemanyoppor tuni
ti
esforentrepreneursi
nv ari
ousfiel
dsli
ke-
Electr
oni
cs,
medicine,engineer
ing,
agricul
ture,
foodtechnologyandpacki
ng,
communicat
ionet
c.
EDPshelpinsearchingsuchoppor tuniti
esandpr ovi
denecessaryinf
ormat
ion,
gui
danceand
assist
ancei
nthesear chandexploi
tingtheseoppor tuni
ti
es.

12.
Enhanci
ngmanager
ial
abi
l
iti
es

Entr
epreneurdevel
opmentprogrammeshel pt heent repreneur stoenhancetheirorganizi
ngand
managerialabi
li
ti
essothatt
heycanr untheirent er
priseef f
icientl
yandsuccessf ul
ly.
Thisisdone
thr
oughor gani
zi
ngeducati
onal,
management ,
traini
ngandor ientati
onprogr
ammes. Vari
ous
speci
ali
zedagenciesl
ikeNati
onalInsti
tut
ef orEnt r
epr eneurshipandsmal lBusiness
Devel
opment (NI
ESBUD),
NewDel hiandEnt r
epreneur shipDev elopmentInsti
tuteofIndia(EDI
I)
,
Ahmedabadar eengagedinentr
epreneurshippr ogrammes.

HumanResour
ceManagement

405CPer
for
manceandCompensat
ionManagement

(
Any2)TOTALMARKS:
20

1)Expl
ainPer
for
manceManagement
.
2)Expl
ainconceptofwages&i
tst
ypes.

3)Expl
ainJobEv
aluat
ion.

_
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___

1)Expl
ainPer
for
manceManagement
.

Management
?

Performancemanagementi sacorpor
atemanagementtool
thathelpsmanager
smonitorand
evaluateemployees'
wor k.Per
for
mancemanagement '
sgoalist
ocr eat
eanenvi
ronmentwhere
peoplecanper f
ormtot hebestofthei
rabi
l
iti
estopr
oducethehighest-
qual
i
tyworkmost
eff
icientl
yandeffect
ivel
y.

Af or
mal perf
ormance- managementpr ogram helpsmanagersandemployeesseeeye-t
o-ey
e
aboutexpectati
ons,goals,andcareerprogress, i
ncl
udi
nghowi ndi
vi
dual
s'workal
ignswiththe
company '
sov er
allvi
sion.General
lyspeaking,perfor
mancemanagementv i
ewsindivi
dualsi
nthe
contextofthebroaderwor kpl
acesystem.I ntheory,
youseektheabsol
uteperf
ormance
standard,t
houghthati sconsi
deredunattainable.

HowPer
for
manceManagementWor
ks

Performance-managementprogramsuset radi
ti
onal
tool
ssuchascr eat
ingandmeasur ing
goals,object
ives,
andmilest
ones.Theyalsoaimtodefi
newhatef f
ecti
veper f
ormancelooksl
i
ke
anddev elopprocessest
omeasur eperf
ormance.However,i
nsteadofusingthetr
adit
ional
paradigm ofyear-
endrevi
ews,perfor
mancemanagementt urnsever
yinteract
ionwit
han
empl oyeeint
oanoccasiontolearn.

Managerscanuseper f
ormancemanagementt oolstoadjustwor kfl
ow,recommendnew
coursesofacti
on,andmakeotherdecisionst hatwil
l hel
pempl oyeesachievethei
robject
ives.I
n
tur
n,thi
shelpsthecompanyreachitsgoal sandper form opti
mally.Forexample,t
hemanagerof
asalesdepart
mentgivesherst
afftargetr evenuevolumest hattheymustr eachwithi
naset
peri
od.Inaperfor
mancemanagementsy stem, al
ongwi t
ht henumber s,t
hemanagerwoul d
off
erguidancegaugedtohel
pthesal espeopl esucceed.
ManagementPr
ogr
ams

Alt
houghper f
ormance-managementsoftwarepackagesexi
st,
templ
atesar
egener
all
y
customizedforaspeci
ficcompany.Eff
ecti
veperformance-
managementpr
ogr
ams,howev
er,
contai
ncertai
nuniver
salelement
s,suchasthefollowi
ng:

Ali
gni
ngemployees'
act
ivi
ti
eswi
ththecompany
'smi
ssionandgoals.Empl
oyeesshoul
d
under
standhowthei
rgoal
scont
ri
butetot
hecompany
'soveral
lachiev
ements.

Devel
opi
ngspecif
icjob-
perf
ormanceoutcomes.Whatgoodsorserv
icesdoesmyjobproduce?
Whateff
ectshoul
dmywor khaveonthecompany ?HowshouldIint
eractwi
thcl
i
ents,
col
l
eagues,andsupervi
sor
s?Whatproceduresdoesmyjobent
ail
?

Creati
ngmeasur ableperf
ormance-basedexpectati
ons.Employ
eesshoul dgiv
einputintohow
successismeasur ed.Expect
ati
onsi ncluder
esul
ts—thegoodsandser vi
cesanempl oyee
produces;acti
ons—theprocessesanempl oy
eeusest omakeapr oductorperf
orm aservi
ce;
andbehav i
ors—thedemeanorandv aluesanemployeedemonstratesatwork.

Defi
ningj
ob-devel
opmentplans.Superv
isor
sandempl oy
eestoget
hershoulddef
ineajob'
s
dut
ies.Employeesshoul
dhaveasayi nwhattypesofnewthi
ngstheylear
nandhowt heycan
usethei
rknowledgetothecompany '
sbenefi
t.

Meetingr
egularl
y.Insteadofwai
ti
ngforanannualappr
aisal
,manager
sandempl
oyeesshoul
d
engageacti
velyyear-r
oundtoeval
uat
epr ogr
ess.

2)Expl
ainconceptofwages&i
tst
ypes.

Meani
ngofWages:

Wagesar et
heremuner at
ionorrewar df
orlabour.Therearetwomai nki
ndsofwages-(1)
Nominalwagesand( 2)Realwages.Thet erm‘nominal wages’ref
erstomoneywages.Butt he
ter
m‘ r
ealwages’
ref erstothecommodi tiesandservicesthatthemoneywagescanpr ovide.
Thestandar
dofli
v i
ngofwor ker
sreliesonr eal
wagesandnotonmoneywages.Real wages
dependonmanyt hingsl i
kethepurchasingpowerofmoney ,additi
onalbenef
it
stheworkersget
suchasfreeboar
dingandl odgi
ng,regul
ar i
tyofemployment ,worki
ngconditi
onsandsoon.Real
wagedonotalway sr ai
sewi t
hthemoneywages.
Despit
eofanincr
easei
nmoneywages, worker
smaybeworseoffi
fpricesri
sefastert
han
moneywages.Sooneisneversur
ethatworker
sinapar
ti
cul
arcountr
yar ewell
offmerelyby
l
ookingint
othei
rmoneywages.But,
gener
allywhent
her
eisaref
erencetowages, i
tisthe
moneywages.

Ty
pesofWages:

Wageshav
ebeencl
assi
fi
edi
ntot
hreecat
egor
ies:

(
1)Li
vi
ngwages

ADVERTI
SEMENTS:

(
2)Mi
nimum wages

(
3)Fai
rwages

(
1)Li
vi
ngWages:

Livi
ngwageshasbeendefineddi f
ferentl
ybydi f
fer
entpeopl eindifferentcountri
es.Thebest
defi
nit
ioni
sgivenbyJusti
ceHi ggi
nswhi chreads“ Livi
ngwagei sawagesuf fi
cientt
oensur e
theworkmanfood,shel
ter
,clothi
ng,frugalcomf or
t,provisi
onforev ildaysetc.asregardforthe
skil
lofanar
ti
san,i
fheisone” .Li
vingwagesmeanst hepr ovi
sionfort hebarenecessit
iesplus
cert
ainameni
ti
esconsider
ednecessar yforthewellbeingofthewor kersi
ntermsofhi ssocial
stat
us.

InIndia,Arti
cl
e43oft heIndi
anConstit
uti
onstat
esthatthestateshall
endeavourt
osecureby
suitablelegi
slati
onoreconomicorgani
zati
onorinanyotherwayt oallwor
ker
sal i
vi
ngwage,
conditionsofwor kensuri
ngadecentstandar
dofli
feandfullenjoymentofpl
ea­sur eand
socialandcul tur
alopport
uni
ti
es.Thus,Gover
nmentofIndiahasadoptedasoneoft he
dir
ect i
vesoft hepri
ncipl
eofsl
atepoli
cytoensur
elivi
ngwages.
(
2)Mi
nimum Wages:

Themi nimum wagemaybedef i

nedast helowestwagenecessaryt omaintai
naworkerandhi
s
famil
yatt hemini
mum lev
el ofsubsi
stence,whichincl
udesfood,clothi
ngandshel
ter.Whent
he
governmentfi
xesminimum wagei napar ti
culart
rade,
themainobj ecti
vei
snottocontrol
or
deter
mi newagesingener
al buttopr
ev enttheemploymentofwor kersatawagebelowan
amountnecessarytomaintaintheworkeratthemi ni
mum levelofsubsist
ence.

Mini
mum wagei nacount
ryi
sfixedbyt
hegover
nmenti
nconsul
tat
ionwi
thbusi
ness
or
ganizat
ionsandtr
adeuni
ons.TheGover
nmentofI
ndi
apassedaMini
mum WageActi
n1948.

Mi
nimum wagesl
egi
slat
ioni
ssupposedt
ohav
ethef
oll
owi
ngbenef
it
s:

(
i)Thesel
awspreventdi
shonestempl
oyer
sfr
om expl
oit
ingi
gnor
antper
sonswhopossessv
ery
l
i
ttl
ebargai
ningpower.

(
ii
)Theseaboli
shthecompeti
tionoft
hel
owerst
rat
aofwor
ker
swi
tht
heuppergr
adesandt
end
t
opreventdepr
essingofwages.

(i
ii
)Theproducti
vi
tyofi
ndust
ryi
sincr
easedbyfor
eignempl oy
erst ouset hemosteffi
cient
product
ionmethodsandthemostmodernequi
pment,i
nor dertoenabl eemployeestoearnthe
l
ivingwage.Butatt
hesametime,t
heworker
sarestimul
atedt oincreasehiseff
ici
encyinorder
toholdhisj
ob.

(i
v)Employ
erswi
thhi
ghst
andar
dsar
epr
otect
edagai
nstunder
sel
l
ingbycompet
it
orswi
thl
ow
standar
ds.

(
3)Fai
rWages:
Afairwageissomethingmoret hantheminimum wages.Fairwageisameanbetweent he
l
ivi
ngwageandt hemi ni
mum wage.Whi lethelowerl
imitofthefai
rwagemustobviousl
ybet he
mini
mum wage, theupperl
imitisthecapacit
yoftheindustr
ytopayfan-wagecompares
r
easonablywit
htheav er
agepay mentofsimilart
aski
not hertr
adesoroccu­pati
onsrequiri
ng
t
hesameamountofabi l
it
y.Fairwagedependsont hepresenteconomicposi
ti
onaswell ason
i
tsfutur
eprospects.

Def
ini
ti
ons:

“Awagemaybedefinedasthesum ofmoneypai
dundercont
ractbyanempl
oyert
owor
kerf
or
ser
vicesr
ender
ed.
”-Benham

“
Wagesi
sthepay
mentt
olabourf
ori
tsassi
stancet
opr
oduct
ion.
”-A.
H.Hansen

‘
Wager
atei
sthepr
icepai
dfort
heuseofl
abour
.”-
McConnel
l

ADVERTI
SEMENTS:

“Awagei
sprice,i
tisthepr
icepai
dbyt
heempl
oyert
othewor
keronaccountofl
abour
per
for
med.”-
J.R.Turner

Ty
pesofWages:

I
nreal
pract
ice,
wagesar
eofmanyt
ypesasf
oll
ows:

1.Pi
eceWages:

Pi
ecewagesaret
hewagespaidaccordingt
otheworkdonebytheworker
.Tocalculat
ethe
pi
ecewages,
thenumberofuni
tsproducedbythewor
keraret
akenint
oconsi
deration.

2.Ti
meWages:

I
fthel
aboureri
spaidf
orhi
sservi
cesaccordi
ngtot
ime,
iti
scal
l
edast
imewages.Forexampl
e,
i
fthel
abourispai
dRs.35perday
,itwi
llbeter
medasti
mewage.
3.CashWages:

ADVERTI
SEMENTS:

Cashwagesref
ert
othewagespai
dtot
hel
abouri
nter
msofmoney
.Thesal
arypai
dtoawor
ker
i
saninst
anceofcashwages.

4.Wagesi
nKi
nd:

Whenthel
abour
erispai
dinter
msofgoodsrat
hert
hancash,
iscal
l
edt
hewagei
nki
nd.These
t
ypesofwagesar
epopulari
nrural
areas.

5.Cont
ractWages:

Underthistype,
thewagesar
efi
xedi
nthebegi
nningforcomplet
ework.Forinst
ance,i
fa
cont
ractoristol
dthathewi
ll
bepai
dRs.25,
000fortheconst
ructi
onofbuil
ding,
itwil
lbet
ermed
ascontractwages.

Concept
sofWages:

Thef
oll
owi
ngar
ethet
womai
nconcept
sofwages:

A.Nomi
nal
Wage:

B.Real
Wage:

A.MoneyWagesorNomi
nal
Wages:

Thet
otal
amountofmoneyrecei
vedbyt
hel
abour
eri
nthepr
ocessofpr
oduct
ioni
scal
l
edt
he
moneywagesornomi
nalwages.

B.Real
Wages:
Realwagesmeant r
ansl
ationofmoneywagesi nt
orealt
ermsorinter
msofcommodi ti
esand
servi
cesthatmoneycanbuy .Theyref
ertotheadvant
agesofworker’
soccupat
ion,
i.
e.t
he
amountoft henecessar
ies,comf or
tsandluxur
iesofl
if
ewhichtheworkercancommandin
ret
urnforhisserv
ices.

Anexampl ewil
lmaket het
hingsclear
.Suppose‘
A’recei
vesRs.500p.m.asmoneywages
dur
ingthey ear
.Supposealsothatmidwaythr
oughtheyeart
hepricesofcommodi
ti
esand
ser
vices,
thattheworkerbuys,goup,ontheaver
age,by50%.

ADVERTI
SEMENTS:

Itmeansthatt
houghthemoneywagesr emaint
hesame,thereal
wages(consumpti
onbasket
i
nt er
msofcommodi ti
esandser
vices)arer
educedby50%.Realwagesal
soincl
udeext
ra
supplement
arybenef
it
salongwi
ththemoneywages.

406CI
nter
nat
ional
HRM

TOTALMARKS:
20

Q.
1-Whati
sIHRM pr
ocess?Expl
ainwi
thobj
ect
ives&f
unct
ions.Whati
sthedi
ff
erencebet
ween

domest
ic&I
HRM?

Q.
2-whati
scr
oss-
cul
tur
einI
HRM?Expl
aint
heconceptcul
tur
alsensi
ti
vi
ty&mul
ti
cul
tur
ali
sm i
n

I
HRM.
_
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
___
_

Q.
1-Whati
sIHRM pr
ocess?Expl
ainwi
thobj
ect
ives&f
unct
ions.Whati
sthedi
ff
erencebet
ween

domest
ic&I
HRM?

ConceptofI
nter
nat
ional
HumanResour
ceManagement

TheconceptofHRM aswear efamil

i
arwitht
odaybegant oevolvefr
om theearl
y19thcentur
y.
ButtheconceptofInternati
onalHRM isofar
ecentori
gin.I
ncreasedint
ernat
ionalt
radeand
widespr
eadglobali
zationov ert
hepastfewdecadeshavegivenriset
oacont emporarybr
anch
ofHRM, i
.e.
,i
nternati
onal HRM, al
soknownasglobalHRM.

I
tdealswiththetypicalHRM functionslikerecruitment,selection,t
rai
ninganddev el
opment,
perf
ormanceappr aisal
,et
c.,
atthei nternati
onal level
.Accor dingtoHughScul lion,
Inter
nat
ional
HRM (IHRM)involvestheHRM i ssuesandpr oblemsar isi
ngf rom thei
nt ernat
ional
isati
onof
busi
ness,andtheHRM st rat
egies,policiesandpr act
iceswhi chf i
rmspur sueinresponsetothe
i
nternat
ional
i
sationofbusiness.

IHRM i
sconcernedwi t
ht hemanagementofallthehumanr esour
ceact i
vi
ti
esinglobal
organi
zati
onswithoutregardtogeographi
cboundari
es.Itistheprocessofprocurement,
all
ocat
ionandeffecti
veut i
l
izat
ionofhumanresourcesininternat
ionalbusi
ness.I
tisthe
i
nterpl
ayamongt hethreedimensionshumanresourceactiviti
es,
typesofempl oy
eesand
countr
iesofoper
ation.

Inotherwords,thebasichumanr esourceprocessessuchasHRpl anning,

procurement,tr
aini
ng
anddev el
opment ,i
nducti
on,compensat i
on,performancemanagementandi ndustr
ialr
elat
ions
arei
nf l
uencedbyt woothergroupsofv ar
iables.Fir
stgroupofvari
ablesconsist
soft y
pesof
employees;thesemaybehostcount r
ynat i
onals,parentcount
rynati
onalsandthirdcountr
y
nati
onals.

ADVERTI
SEMENTS:
Secondgroupofv ar
iablesconsi
stsofcountr
iesi
nvol
vedt
hehostcount
rywher
easubsidi
ary
maybel ocated,
thehomecount rywherethecompanyhasi
tsheadquar
ter
sandtheot
her
countr
iesthatmaybet hesourceoffi
nanceorlabour
.

Obj
ect
ivesofI
nter
nat
ional
HumanResour
ceManagement

Withi
npr esentbusinessscenari
o, t
herearelar
gernumberofor ganisati
onsconductbusi
ness
beyondnat i
onalboundaries.Thediffer
encesinor gani
sat
ionalenv i
ronmentacrossnati
onshave
encouragedt odetermineanddev el
opi nt
ernat
ional HRst
affi
ngandpr acti
ces.Atgl
obal
scenar
io, i
tisneedfultostudyaboutHRhi ri
ng,staffi
ngdevel
opi ng,compensatingand
apprai
singHRf orbet t
erutil
i
sati
onofpeopl e.

I
nter
nati
onalHumanResour
ceManagementi
stheprocessofmanagi
ngpeopl
eini
nter
nat
ional
v
enturesandinv
olv
esact
ivi
ti
esi
natl
eastt
wonations.

I
tisf
actt
hatthesuccessofbusinessandtradesar
edependsontheski
ll
sandqual
ityofhuman
r
esour
cesandhowef fect
ivel
ytheseresour
cesaremanagedanduti
li
sedati
nter
nat
ionall
evel
.

ADVERTI
SEMENTS:

1.I
tenhancestodevel
opmanager
ial
ski
l
ls,
organi
sat
ional
knowl
edgeandt
echni
cal
abi
l
iti
esof
HRmanager sandemploy
ees;

2.Todev
elopmor
eandbet
terhandl
eofgl
obal
busi
nessoper
ati
ons;

3.Tomanageandsecur
etheper
for
mance,
compensat
ionandcar
eerpat
hofempl
oyees;

4.Tomanageandor
gani
secr
osscul
tur
alcounsel
l
ingandl
anguaget
rai
ningpr
ogr
amme;

ADVERTI
SEMENTS:
5.Todev
elopmor
efeasi
bleunder
standi
ngofwor
kpr
act
icesatgl
obal
lev
els;

6.Tor
aiseanddev
elopbet
terandnewper
for
mancemanagementofhumanr
esour
ces;

7.Togetmor
eandmor
eoppor
tuni
ti
eswi
thi
ngl
obal
HRscenar
io;

8.Todev
elopbet
terandcompet
it
iveHRst
rat
egi
esi
ngl
obal
compet
it
ivescenar
io;

9.Tor
educet
hecul
tur
aldi
ff
erencesasami
cabl
eforcul
tur
alenv
ironment
.

Di
ff
erencesbet
weeni
nter
nat
ional
anddomest
icHRM

1.TOPI
C:DI
FFERENCESBETWEENI
NTERNATI
ONAL&DOMESTI
CHRM

2.WHATI SINTERNATIONALHRM?•I HRM canbedefi

nedassetofacti
vi
ti
esaimedmanagi
ng
organi
sati
onalhumanresour
cesatinter
nati
onall
evelt
oachieveor
gani
sati
onal
andachi
eve
competit
iveadvant
ageoveratnat
ionalandi
nter
nati
onall
evel.

3.WHATI SDOMESTI CHRM?•Domest icHRM i stheprocessofprocuri

ng,allocat
ingand
eff
ecti
velyut
il
isi
ngt hehumanresourcesi nlocalcount
ri
es.Bythenamei tself,
youshould
al
readyhaveani deat hatI
HRMsworki nternati
onall
yorbeyondnational
bor ders,
whereasit
s
domesticcounterpartworkswi
thi
ntheset ,l
ocal,
nati
onalborder
s.

4.Domestic&int
ernat
ionalact
ivi
ti
esoftheHRM f uncti
onThecultur
alenvir
onmentTheindustr
y
wit
hinwhichthemulti
nati
onalispri
maril
yinvolvedCompl exi
tyi
nvolvedinoper
ati
ngindiff
erent
countr
iesandemployi
ngdiffer
entnati
onalcategor i
esofemployeesAtti
tudesofseni
or
managementExtentofreli
anceofthemultinat
ional onit
shome-count r
ydomesticmarkets

5.DI
FFERENCEBETWEENI NTERNATIONAL&DOMESTI CHRM I
NTERNATIONALHRM 1.IHRM
i
sdoneatint
ernat
ional
lev
el.DOMESTICHRM 1.Domest
icHRM i
sdoneatnat
ional
lev
el

6.•I
HRM i
sconcer
nedwi
thmanagi
ngempl
oyeesbel
ongi
ngt
omanynat
ions.•Domest
icHRM
i
sconcer
nedwi
thmanagi
ngempl
oyeesbel
ongi
ngt
oonenat
ion.

7.•IHRM hasconcer nedwi t

hmanagi ngaddi
ti
onalact
ivit
iessuchasexpatr
iatemanagement.•
I
HRM i sverycomplicatedasitisaff
ectedheavi
lybyexternal
factor
ssuchascultur
al
di
fferencesandinsti
tutionalf
actor
s.•DomesticHRM isconcernedwithmanagingli
mited
numberofHRM act i
vit
iesatnati
onallevel
.•Domesti
cHRM i slesscompl
icatedduetoinf
luence
fr
om t heext
ernalenvir
onment .

8.•Humanr esourcemanagerswor ki
nginani nt
ernat
ional env
ironmentfacet heproblem of
addr
essingHRi ssuesofemployeesbelongingtomor ethanonenat ionali
ty.Hence,theseHR
managersneedt osetupdif
ferentHRM systemsf ordif
ferentlocat
ions.•Humanr esource
managersindomest i
cenvi
ronmentadmi nisterHRprogrammest oempl oyeesbelongingtoa
si
nglenati
onali
ty.

9.•Internati
onalHRM requir
esgreat
erinvolvementi nthepersonall
ifeofemploy
ees.TheHR
managerofanMNCmustensur ethatanexecut i
vepost edtoaf or
eigncountr
yunderst
andsall
aspect softhecompensationpackageprov i
deint heforei
gnassignment,suchascostofli
vi
ng,
taxes,etc.•Inthedomesticenvi
ronment,theinvolvementoft heHRmanagerordepar t
ment
withanempl oy
ee’sfamil
yislimi
tedtoprov i
dingfami l
yinsur
anceprogrammesort r
ansport
facil
i
tiesincaseofadomest i
ctr
ansfer.

10.•I
nter
nati
onalHRM hastodealwithmor eext
ernalfact
orsthandomesti
cHRM.•Domest i
c
HRM hastodealwit
hlessexter
nalthanIHRM.•Ther earemorer i
sksi
nvol
vedinIHRM thanin
thedomesti
cHRM.•Ther ear
ef ewerri
sksinvol
vedindomest i
cHRM thaninint
ernat
ionalHRM.

Funct
ions

Recr
uit
mentandHi
ri
ng

Oneoft hemostbasi cfunct i

onsofhumanr esourcesisrecruiti
ngaqual ifi
edwor kf
orce.This
areaofHRhassev eralsub-objecti
ves,includingdevelopingjobdescr i
ptions,
interv
iewing
potent i
alemployees,relocati
onandv i
sal ogisti
csandnegot i
atingsal
ariesandbenef i
ts
packages.Smal lbusinessowner scanspeci f
ical
lytakeadv antageofthebenef it
sofrecruit
inga
diversewor kf
orcebecauset hereisinherentv al
ueinkeepi ngthebestandbr i
ghtestemployees
witht heorgani
zation.Skill
edempl oyeesar eoneoft heorganization'
smostef fecti
veresources
ast heyhelptoedgeoutcompet it
ion,evenwhent hatcompet i
tionisalargercompany .Assuch,
ther ecrui
tmentandhi ri
ngf uncti
onofHRf eedsintoev er
yot herpartoftheorganizati
on's
success.

Tr
aini
ngandPr
ofessi
onal
Dev
elopment
Whi lehiringhi ghl yskill
edempl oyeesi sagoal forgl obal HR, mostempl oy eessti
llrequiresome
l
ev el oftrainingorpr ofessional dev el
opmentoncet heyar eonboar d.Ev erybusinesshasi town
policiesandpr ocedur es,andt rainingnewempl oyeesi sessent i
altot hesmoot hoper ati
onoft he
organi zation.Tr ainingempl oy eesoncr oss-cultur alcommuni cati
onwoul dbeessent ialwhena
companyhascust omer slivingi nmanydi fferentcount ries.Addi t
ional l
y,humanr esourcesof t
en
prov idespr ofessi onal development- -includingof f-sitet rainingpr ogr ams, opportuniti
esf or
furthereducat ionandnet wor king- -asani ndividual izedt rainingincent ivef oremploy ees.These
professi onal dev elopmenti ncent ivescanbet ai l
or edt oal lowempl oy eest otakeadv antageof
global oppor tuni ti
est hroughonl inet raini
ngpr ogr ams, inter national academi cconf erencesand
regional net wor kingev ents.Ther esultsar ewi n- win: Theor gani zati
onbenef i
tsfr
om adi verse
bodyofknowl edgehel dbyi tsequal lydi ver
sewor kf orce, andt heempl oyeesbel i
ev ethe
busi nesst akest heirlearningandper sonal dev elopmentpl ansser iousl y
.

Benef
it
sandCompensat
ion

Intheincr easinglydi verseandgl obal i

zedwor ld,benef itsandcompensat ionhav ebecomean
evenmor eat tracti
v eobj ect i
vef orHRbecauseoft her iseofawor k-l
ifequal it
ytheory.This
theoryst atest hatanempl oyee'ssenseoft i
meshoul dbedi v i
dedbet weent heamountshe
contri
but est ot hejobandherl ev el ofsat i
sfact i
oni nherper sonal li
fe.Taki ngcuesf r
om
organizat i
onsoper atingi nternational l
y,thetheor yadv ocatest hatbusinessescanhel ppr omote
thi
swor k-l
ifebal ancebypr ovidingbenef i
tsandi ncent ivessuchason- sit
echi l
dcare,extended
vacati
ont i
me, mat ernityandpat erni t
yleav eandf l
exi blewor ki
nghour s.Theseadded- val
ue
benefitsar econsi der edpar tofagl obal i
zedor ganizat i
onbecauset heyexpandupont he
mandat esofl aborl awbyt heU. S.f eder algov ernment .Inst
eadofof feringt hemandat ed
minimum wageandhol idayt ime, forinstance, smal l businessescanseekt oali
gntheir
compensat ionpl ansi namor epr ogr essiveway ,i
ndi cativeofmanygl obal busi
nessest hat
rewardempl oy eesbyi ncr easingt heiraut onomy .

I
nter
nat
ional
Legal
Compl
i
ance

Asor gani zati

onsexpandi ntoforei
gnmar ketsortot akeonempl oyeesthatarenational sof
othercount r
ies,
theymustbef amili
arwitht helaborandt axlawsofmanydi f
fer
entj uri
sdictions.
Hiringsomeonef r
om anothercount r
ymi ght,forexampl e,r
equir
ehumanr esourcest oappl yfor
visas, calculatetaxratesinadiffer
entmannerorpr ov idedatatoImmi gr
ationand
Nat ionalizati
onSer vi
ces.Keepingabr eastoft heselawsandhowt heyaffecttheorgani zati
oni s
anext remel yimportantobject
iveforglobal HRbecausef ai
lur
etofollowthelawmayr esultin
thebusi nessbei ngheldlegall
yorfinanciall
yliabl
e.